The Buy Scan | August 24th, 2022

Published on 08/24/22 | Saurav Sen | 1,753 Words

The BuyGist:

  • The Buy Scan is a weekly overview of markets, investing, and anything we find noteworthy in the investing zeitgeist.
  • A lot of the discussion revolves around our holdings and our Watch List.


We’ve got to tip our hats to Elon Musk – not because he jolted (pun intended, always) the automobile industry out of the 20th century but because he has a knack of saying and doing inexplicably dumb things. Now, we will probably get a lot of flak for criticizing Lord Elon the Infallible, but we don’t care. We don’t believe in hero-worship. They may be geniuses but that doesn’t preclude them from being ********.

Elon wanted to buy Twitter. And then he changed his mind. So, he found a way to (possibly) back out of his commitment to Twitter shareholders to buy the company at roughly $53/share. He claims that Twitter misled him because they have more bot accounts than they claim. Twitter reports mDAU (monetizable daily active users) every quarter. Musk claims these mDAU numbers are total BS. Twitter disagrees. But the question is whether it matters.

Matt Levine wrote a fantastic piece on this drama. We wish we could write like Levine. But we digress. Here’s the long and short of his take on this latest episode of WTF Elon!?

“This is extremely dumb and I wish I had not written it. But I feel like almost everything that I see about this dispute takes place in the alternate universe, the one where Twitter and Musk are going to court to determine once and for all how many bots there are. They just aren’t. In our actual universe, Twitter has made only extremely cautious and limited representations about how it counts bots. And Musk is mad that the bot-counters didn’t count bots the way he wanted them to. He met with Twitter’s management, and they explained how they count bots, and he was horrified. He came away from their meeting thinking that he could do a better job of fighting spam at Twitter, by sprinkling some machine learning on the spam or whatever. That’s great! That’s why he wanted to buy Twitter! And why he should have to!”

Yesterday we saw another twist in this show. A whistleblower named Peiter Zatko (“Mudge”) came forward that claimed that Twitter has been misleading the public on cybersecurity and the issue of bots. This is godsent for Elon…especially this:

“Agrawal’s Tweets and Twitter’s previous blog posts misleadingly imply that Twitter employs proactive, sophisticated systems to measure and block spam bots,” the complaint says. “The reality: mostly outdated, unmonitored, simple scripts plus overworked, inefficient, understaffed, and reactive human teams.”

According to that Washington Post summary, Mudge’s main complaint about bots is how Twitter counts it and how apathetic the company was/is towards the bots issue. This could all be true. And they are serious accusations. Twitter needs to respond, if it has a worthy rebuttal. The timing of Mudge’s complaint, however, is interesting.

We can’t help but think that politics has a big role to play in all this. This whole bots thing looks like a ruse. Remember, before signing any papers, Elon had criticized Twitter for being too left wing on the political spectrum. That could also be true (although from experience, there seem to be no shortage of right-wing trolls on Twitter). So, one day, Elon decided he’ll just buy Twitter and make it “better”. Things moved along at rapid pace. Jack Dorsey (former CEO) welcomed the proposal. Parag Agarwal (current CEO) seemed less enthusiastic, but he said all the right things that a responsible CEO of a public company should say. Elon and Twitter signed an agreement. And shortly thereafter, the whole thing derailed. We think it was because Elon realized that he couldn’t mold Twitter to his liking.

We don’t know whether Elon Musk is a Republican or Democrat. Maybe he’s neither. Maybe he’s both. We do know that, of late, his criticism has primarily been directed towards Democrats and the “woke” gang. Maybe he wanted to make Twitter a total wild west where anyone can cry wolf or “fire!” or be totally abhorrent without any consequence. And maybe Agarwal and team pushed back because that might drive out a lot of mDAUs. If Twitter becomes a hostile place, it’ll just be left with angry mobs. It could mean losing a lot of celebrities, businesspeople and companies that drive conversations (and hence advertising revenues) on Twitter. Maybe they feared that Elon would (intentionally or not) make what Donald Trump went out to create with Truth; or what has become of Facebook.

Twitter told us that one of their main focus areas was “improving the health of conversations”. What they meant was that Twitter should, at its best, be a safe place to exchange thoughts and ideas; safe from trolls, bots and political IT cells. Maybe they didn’t do a good job. But Elon, with all his divine intelligence, would have known this before he signed any papers.

We do agree with Elon on one thing (apart from the need for EVs to go mainstream): Bots should be completely eliminated, and Twitter didn’t do a good job of it. But maybe that generic idea doesn’t release him from paying the billion-dollar fee for backing out of a deal.

Speakin’ of Elon…

Tesla: What would you believe?

A deep-dive on Tesla is long-overdue. And what better time to do it than now – this week Tesla’s stock will split 3-to-1. The split doesn’t alter Tesla’s valuation. But it makes the stock more accessible to millions of small investors who may be a few thousand dollars to “play the market”. A lower share price gives them a chance to buy in without compromising on diversification. Not surprisingly, we’ve got some requests that can be summarized as follows: 

“Should I buy TSLA after the split?”

Firstly, we’re in no position to tell you what you “should” be doing with your money. We can only tell you what we do with ours. So, will we buy Tesla? We need to do a full investment thesis to answer that. But before we get started, here’s a snippet from our Watch List (updated today). We put in Twitter for fun…

So, would you believe Tesla will clock about 45% in ANNUALIZED revenue growth over the next few years? Tall order. But we’ve been wrong about Tesla (so far) because, well, basically we’ve been saying that “the Germans are coming!” But they haven’t arrived, not in any meaningful sort of way anyway. Maybe this gas supply fiasco with Putin this year will permanently push the German public to reject imported fossil fuels from foreign autocrats and monarchs. And then the big three – Volkswagen, Mercedes, and BMW – will finally get serious. 

We’ll have our answer ready by the end of next week. 

Clarity in Investing

When we created The Buylyst, we wanted to offer a worthy alternative to Wall Street Research, sensationalist media, and random investing blogs with questionable quality. But we came from Wall Street, which shaped our ideas in many ways. For more than a decade, our experience shaped our brains. We built our service with that mental limitation (if we can call it that). But now it’s been a few years, and we’ve offloaded some of that baggage, for better or worse. So, we decided to improve the product.

Our north star was always to offer clarity in investing. We left our cushy jobs because we sensed mass confusion in investing – not because there was a lack of resources but because there were too many of them. We thought we could do something about it…to cut through the noise. For the sake of full disclosure, we also left our jobs because we wanted to set free our wild creative instincts. We wanted to create a product from scratch…and WFA (work from anywhere) long before it was a thing. So, it wasn’t all about making the world a better place.  :=)

The Buylyst is currently in a transition phase. We’ve heard our subscribers over the past few years, and we want to use that input into creating a more useful investment resource. The north star remains the same – clarity in investing. The execution will be different.

The new Buylyst will be leaner, and more analytics driven. We believe it will be a significant upgrade. The Watch List, or its latest upcoming iteration, will take center stage. We will still publish our Research – thematic analysis and investment theses – regularly, but less frequently. And finally, we will still publish our Portfolio. Subscribers may or may not choose to mirror our portfolio – we have no say in their financial decisions.

So, in order of importance, this is what the new Buylyst will contain:

  1. A new, evolved Watch List
  2. Research & Analysis
  3. Portfolio
  4. Mental Models

We still haven’t determined pricing. But we do know that our current subscribers will be ushered into highly discounted plans. New subscribers will have a choice of Monthly and Annual plans, at new prices.

We will be releasing most of these updates by the end of September. Stay tuned!

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