#SOTD 44: Making $150M relatableApril 14, 2022 2023-01-04 18:57
#SOTD 44: Making $150M relatable
How bad would you feel if you were fined Rs. 1M?
Wait, make that $1M.
Hang on, let’s round that up to… um, $150M?
Recovered from the shock already?
But what if you are not an ordinary person? What if you are Elon Musk?
How upset would you feel?
- Elon Musk took a 9.2% (wait, 9.1%?) stake in Twitter
- He was to take up a board seat and then refused
- Matt Levine wrote a hilarious email about this (and I posted about his email!)
The naughty part: Elon delayed disclosing when his stake crossed 5%… which resulted in him being able to buy the shares at a lower price.
Elon filed the correct form (Schedule 13D) the next day, but it requires more fulsome disclosures, which revealed he had crossed the 5% threshold on March 14. Meaning he’d been obligated to disclose his stake back on March 24. By illegally concealing his stake for 11 days, Musk was able to continue buying shares from sellers who didn’t know he was accumulating a huge position. Had he disclosed his shares properly on March 24, TWTR would have shot up 25% then, instead of on April 4, and the shares he bought subsequently would have garnered selling shareholders approximately $150 million more. That’s fraud, and while I have increasingly less confidence in the SEC, Congress has recently beefed up its power to seek disgorgement of ill-gotten gains for securities law violations.
Which brings us back to the original question: How upset should Musk feel if he has to pay a $150M fine in this situation?
Here’s where Prof G puts on his number-storytelling hat. Knowing that large numbers seem meaningless to ordinary readers, he gives this analogy (emphasis mine):
Even if the SEC acts, $150 million is immaterial to Elon. On a relative basis, his entire $2.5 billion investment in Twitter is about the price of a MacBook for the average household. A $150 million fine is buying an extra charger.
Hm, $150M = en extra Macbook charger. Pfft. I don’t think this would be giving him sleepless nights.
Make numbers relatable to your audience.