WEBVTT 00:00:00.000 --> 00:00:01.230 align:middle line:90% [MUSIC PLAYING] 00:00:01.230 --> 00:00:03.070 align:middle line:84% - Welcome back to "Yahoo Finance," everyone. 00:00:03.070 --> 00:00:04.470 align:middle line:90% We're talking Twitter. 00:00:04.470 --> 00:00:07.650 align:middle line:84% The company posted its biggest intraday surge since IPOing 00:00:07.650 --> 00:00:10.800 align:middle line:84% in 2013, and it's thanks to Elon Musk 00:00:10.800 --> 00:00:13.980 align:middle line:84% and his 9.2% stake in the company and signs 00:00:13.980 --> 00:00:15.970 align:middle line:90% of a possible shake up ahead. 00:00:15.970 --> 00:00:18.180 align:middle line:84% Well, let's break that down with our next guest, Mandeep 00:00:18.180 --> 00:00:21.240 align:middle line:84% Singh, Senior Analyst and TMT team lead 00:00:21.240 --> 00:00:22.710 align:middle line:90% at Bloomberg Intelligence. 00:00:22.710 --> 00:00:24.160 align:middle line:90% Thank you for joining us today. 00:00:24.160 --> 00:00:27.180 align:middle line:84% So Mandeep, what should we make of this stake? 00:00:27.180 --> 00:00:31.030 align:middle line:84% How do we think Elon is going to navigate this? 00:00:31.030 --> 00:00:32.890 align:middle line:84% MANDEEP SINGH: Well, so look, he hasn't 00:00:32.890 --> 00:00:35.890 align:middle line:84% done this in the past in terms of taking such a big stake. 00:00:35.890 --> 00:00:40.630 align:middle line:84% So clearly, a lot of it is driven by his personal feelings 00:00:40.630 --> 00:00:45.110 align:middle line:84% about how the product ought to look like, who should it serve. 00:00:45.110 --> 00:00:47.350 align:middle line:84% And I think what he's trying to do 00:00:47.350 --> 00:00:51.460 align:middle line:84% is to influence the strategy of the company, the board 00:00:51.460 --> 00:00:52.630 align:middle line:90% composition. 00:00:52.630 --> 00:00:56.050 align:middle line:84% We don't know exactly if he has a different CEO in mind, 00:00:56.050 --> 00:00:58.690 align:middle line:84% given the company has already been through a management 00:00:58.690 --> 00:00:59.770 align:middle line:90% change recently. 00:00:59.770 --> 00:01:05.050 align:middle line:84% But clearly, he has views around how Twitter should serve 00:01:05.050 --> 00:01:08.260 align:middle line:90% as a platform for free speech. 00:01:08.260 --> 00:01:11.500 align:middle line:84% And I think you are going to see some board 00:01:11.500 --> 00:01:14.290 align:middle line:84% level changes that will drive some more 00:01:14.290 --> 00:01:17.230 align:middle line:90% product changes eventually. 00:01:17.230 --> 00:01:19.900 align:middle line:84% - And in terms of how this works with obviously the friction 00:01:19.900 --> 00:01:21.550 align:middle line:84% that he's been having with the SEC, 00:01:21.550 --> 00:01:22.990 align:middle line:84% how do you see this move potentially-- 00:01:22.990 --> 00:01:25.540 align:middle line:84% if he does intend to shake up Twitter-- how do you see that 00:01:25.540 --> 00:01:28.070 align:middle line:90% affecting that relationship? 00:01:28.070 --> 00:01:31.420 align:middle line:84% MANDEEP SINGH: Well, so yes, he has been in controversies. 00:01:31.420 --> 00:01:34.630 align:middle line:84% And you mentioned about the friction with the SEC. 00:01:34.630 --> 00:01:39.160 align:middle line:84% Look, I think any time you have a platform like Twitter, 00:01:39.160 --> 00:01:44.320 align:middle line:84% you have to ask yourself, who defines the rules? 00:01:44.320 --> 00:01:47.050 align:middle line:84% And what will happen to section 230? 00:01:47.050 --> 00:01:51.280 align:middle line:84% And how will that influence Twitter's positioning? 00:01:51.280 --> 00:01:53.750 align:middle line:90% So that isn't going to change. 00:01:53.750 --> 00:01:55.450 align:middle line:84% But at the same time, now that he 00:01:55.450 --> 00:01:57.700 align:middle line:84% has such a big stake in the company, 00:01:57.700 --> 00:02:00.490 align:middle line:84% he'll probably be a little bit more careful. 00:02:00.490 --> 00:02:01.360 align:middle line:90% That's my sense. 00:02:01.360 --> 00:02:04.690 align:middle line:84% And my hope is, he's not going to randomly tweet 00:02:04.690 --> 00:02:06.610 align:middle line:84% about something tomorrow that could 00:02:06.610 --> 00:02:09.910 align:middle line:90% have an influence on the stock. 00:02:09.910 --> 00:02:11.680 align:middle line:84% - And do we know, perhaps, the likelihood 00:02:11.680 --> 00:02:15.570 align:middle line:84% of him perhaps making a move to make Twitter private? 00:02:15.570 --> 00:02:17.920 align:middle line:84% MANDEEP SINGH: Well, so that is clearly an option. 00:02:17.920 --> 00:02:21.330 align:middle line:84% And one of the things that is on the table 00:02:21.330 --> 00:02:24.370 align:middle line:84% is a buyout, a full-fledged buyout of the company. 00:02:24.370 --> 00:02:26.790 align:middle line:84% We have seen that happen with some other tech 00:02:26.790 --> 00:02:27.900 align:middle line:90% companies in the past. 00:02:27.900 --> 00:02:31.920 align:middle line:84% And in this case, you could argue that he definitely 00:02:31.920 --> 00:02:37.860 align:middle line:84% has the power to take the company private on his own, 00:02:37.860 --> 00:02:38.670 align:middle line:90% for that matter. 00:02:38.670 --> 00:02:40.380 align:middle line:84% But at the same time, there have been 00:02:40.380 --> 00:02:43.350 align:middle line:84% rumors about Salesforce or Disney 00:02:43.350 --> 00:02:45.930 align:middle line:84% being interested in buying Twitter. 00:02:45.930 --> 00:02:50.790 align:middle line:84% So there are clearly players that have shown interest. 00:02:50.790 --> 00:02:53.250 align:middle line:84% In terms of, what would be the catalyst? 00:02:53.250 --> 00:02:56.430 align:middle line:84% My sense is, if the company continues to underperform 00:02:56.430 --> 00:03:00.240 align:middle line:84% operationally, then there is a case to be made 00:03:00.240 --> 00:03:02.700 align:middle line:90% that it can be taken private. 00:03:02.700 --> 00:03:03.540 align:middle line:90% - And do we know-- 00:03:03.540 --> 00:03:06.630 align:middle line:84% If you're a Tesla shareholder, and you're watching this stake, 00:03:06.630 --> 00:03:08.310 align:middle line:84% and you're hearing about this possible shake 00:03:08.310 --> 00:03:11.310 align:middle line:84% up, if you're watching what he's doing with Twitter, 00:03:11.310 --> 00:03:14.320 align:middle line:84% how do you think they're reacting to this? 00:03:14.320 --> 00:03:17.650 align:middle line:84% MANDEEP SINGH: Well, so, I think they probably 00:03:17.650 --> 00:03:20.710 align:middle line:84% don't have to be worried as much until he 00:03:20.710 --> 00:03:23.500 align:middle line:84% shows interest around running the company 00:03:23.500 --> 00:03:24.680 align:middle line:90% on a day-to-day basis. 00:03:24.680 --> 00:03:27.280 align:middle line:84% And we saw the kind of backlash Jack Dorsey 00:03:27.280 --> 00:03:30.560 align:middle line:84% had to face when he was the CEOs of both companies. 00:03:30.560 --> 00:03:35.050 align:middle line:84% So as long as he stays passive, and he's influencing the board 00:03:35.050 --> 00:03:38.260 align:middle line:84% composition and let somebody else take care of the strategy, 00:03:38.260 --> 00:03:40.090 align:middle line:84% I don't think that Tesla shareholders 00:03:40.090 --> 00:03:42.500 align:middle line:90% have a lot to worry about here. 00:03:42.500 --> 00:03:44.470 align:middle line:84% - And in terms of how this might affect, 00:03:44.470 --> 00:03:47.410 align:middle line:84% perhaps, other social media platforms, how might 00:03:47.410 --> 00:03:49.700 align:middle line:90% that affect that landscape? 00:03:49.700 --> 00:03:52.600 align:middle line:84% MANDEEP SINGH: Well, so my sense is probably, 00:03:52.600 --> 00:03:56.440 align:middle line:84% this is sort of calling the bottom because we've 00:03:56.440 --> 00:03:59.050 align:middle line:84% seen how far the pendulum has swung 00:03:59.050 --> 00:04:02.230 align:middle line:90% for the digital ad companies. 00:04:02.230 --> 00:04:07.240 align:middle line:84% They were probably at their peak of devaluation six months back. 00:04:07.240 --> 00:04:11.630 align:middle line:84% And now they've gone to the other end of the pendulum. 00:04:11.630 --> 00:04:14.800 align:middle line:84% So in terms of the growth prospects, 00:04:14.800 --> 00:04:18.190 align:middle line:84% digital ad market is a very stable 00:04:18.190 --> 00:04:22.360 align:middle line:84% low to mid-teens end market, very large addressable market. 00:04:22.360 --> 00:04:26.500 align:middle line:84% And look, even though we've seen Meta and Snap come down so 00:04:26.500 --> 00:04:30.790 align:middle line:84% much, the fact is, digital ad as a sector 00:04:30.790 --> 00:04:32.530 align:middle line:90% continues to be quite robust. 00:04:32.530 --> 00:04:34.180 align:middle line:90% Yes, it's tied to GDP. 00:04:34.180 --> 00:04:36.830 align:middle line:84% But there is a floor when you think about the evaluation 00:04:36.830 --> 00:04:37.630 align:middle line:90% in this space. 00:04:37.630 --> 00:04:40.330 align:middle line:84% And the timing may have been influenced by the fact 00:04:40.330 --> 00:04:43.270 align:middle line:84% that these companies are trading at a much lower multiple 00:04:43.270 --> 00:04:46.180 align:middle line:90% than they were in November. 00:04:46.180 --> 00:04:48.340 align:middle line:84% - And do we have a sense of when he might go, perhaps, 00:04:48.340 --> 00:04:51.340 align:middle line:84% from being a passive investor in this space and the impact 00:04:51.340 --> 00:04:53.620 align:middle line:90% that might have? 00:04:53.620 --> 00:04:58.360 align:middle line:84% MANDEEP SINGH: Well, so he has almost a 9% stake. 00:04:58.360 --> 00:05:01.390 align:middle line:84% And as I said before, he's going to influence 00:05:01.390 --> 00:05:03.920 align:middle line:90% the board in some capacity. 00:05:03.920 --> 00:05:07.510 align:middle line:84% Whether he likes the existing management is the key question. 00:05:07.510 --> 00:05:10.450 align:middle line:84% Does he think they can execute in terms of the things 00:05:10.450 --> 00:05:14.260 align:middle line:84% that he wants the company to do as a large shareholder? 00:05:14.260 --> 00:05:17.920 align:middle line:84% And that is where I feel, at some point, 00:05:17.920 --> 00:05:20.080 align:middle line:84% if he finds the management isn't delivering, 00:05:20.080 --> 00:05:23.200 align:middle line:84% he may become more active in terms of actively 00:05:23.200 --> 00:05:25.760 align:middle line:90% driving the board changes. 00:05:25.760 --> 00:05:29.890 align:middle line:84% - So when you look at some of Elon's mentors in this space, 00:05:29.890 --> 00:05:31.810 align:middle line:84% does that give us a better idea of perhaps 00:05:31.810 --> 00:05:34.580 align:middle line:90% what he might do with Twitter? 00:05:34.580 --> 00:05:36.680 align:middle line:90% MANDEEP SINGH: Well, yes. 00:05:36.680 --> 00:05:41.330 align:middle line:84% There have been examples of activist changes in the past 00:05:41.330 --> 00:05:44.540 align:middle line:84% and his mentors being involved in some of those. 00:05:44.540 --> 00:05:47.330 align:middle line:84% And clearly, I think there is a case 00:05:47.330 --> 00:05:50.270 align:middle line:84% to be made here because Twitter's stock hasn't done 00:05:50.270 --> 00:05:51.920 align:middle line:90% anything since going public. 00:05:51.920 --> 00:05:54.050 align:middle line:90% And Twitter has been going-- 00:05:54.050 --> 00:05:56.640 align:middle line:84% has been public for almost 10 years now. 00:05:56.640 --> 00:05:59.570 align:middle line:84% So there is a case to be made in terms 00:05:59.570 --> 00:06:01.520 align:middle line:90% of evaluating the options. 00:06:01.520 --> 00:06:04.940 align:middle line:84% But he's not thinking about it in terms of shareholder return. 00:06:04.940 --> 00:06:08.870 align:middle line:84% He's thinking about it more in terms of what the platform 00:06:08.870 --> 00:06:10.110 align:middle line:90% ought to be doing better. 00:06:10.110 --> 00:06:13.730 align:middle line:84% And that is where the contrast is between an activist 00:06:13.730 --> 00:06:15.920 align:middle line:84% like Elliott or Silver Lake, which 00:06:15.920 --> 00:06:19.250 align:middle line:84% is more focused on shareholder returns, the buybacks, 00:06:19.250 --> 00:06:23.060 align:middle line:84% or the free cash flow, whereas Elon is focused more around 00:06:23.060 --> 00:06:26.360 align:middle line:84% what Twitter needs to serve in terms 00:06:26.360 --> 00:06:31.970 align:middle line:84% of being that platform for news and all the live events. 00:06:31.970 --> 00:06:33.245 align:middle line:84% - That is an important distinction. 00:06:33.245 --> 00:06:35.300 align:middle line:84% I do appreciate you joining me today. 00:06:35.300 --> 00:06:38.060 align:middle line:84% Mandeep Singh, the Senior Analyst and TMT team 00:06:38.060 --> 00:06:39.530 align:middle line:90% lead at Bloomberg Intelligence. 00:06:39.530 --> 00:06:41.440 align:middle line:90% Thank you so much.