Elon Musk took out $13 billion in bridge loans when he bought Twitter—and bridge loans are just that: a short-term bridge until you get permanent financing. Bridge loans are also expensive, so Musk is highly motivated to replace his with lower-cost financing. The Wall Street Journal says he's trying hard to do that:
The state of the fundraising talks couldn’t be learned. In mid-December, Mr. Musk’s team reached out to new and existing backers about raising new equity capital at the original Twitter takeover price. Mr. Musk’s advisers had hoped to reach a deal to raise cash at the initial takeover price by the end of 2022.
Say what? Musk and his bankers were trying to sell shares of Twitter at the $54 price Musk paid for them? Even though they were valued at less than 40 bucks on the public market after Musk announced his deal? Who would be insane enough to overpay as much as Musk did? And why would Musk think anyone would do it?
Musk needs to get his ass back into the real world, and he needs to do it fast.
I THINK Musk purchased Twitter, primarily, for non economic reasons. Similar to Bezos buying the Washington Post, or perhaps someone buying a professional sports team, the mean driver is not value. Most folks didn't put a price per share metric on the purchase of the Washington Post for Bezos....
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No, but Bezos wasn't trying to refinance bridge loans, either. That's in part because he waited until after the Post's value had collapsed.
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Sports teams are actually pretty good investments aren’t they? For instance, the guy who bought the Rams for $750 million in 2010 now has a team worth $6.2 billion.
> for non economic reasons
Elmo purchased Twitter because he was forced to. He positioned himself such that he could be forced to because he has the impulse control of a coked-up three year old.
> Most folks didn't put a price per share metric on the purchase of the Washington Post for Bezos
Bezos doesn't desperately need people to give him cash. Elmo is in trouble. As every poor person knows extremely well, you don't want to need money when you're in trouble.
Moving on, I had assumed he had a rigged game going with Mohammad Bone Saw or someone similar, throwing money at him for access, intel and whatever respectability Elmo has left to sell. But it does look like this was just him making a wish to the world.
I expect he'll figure out what poor people already know soon enough.
Bezos bought WaPo in 2013 for $250 million, when he was worth ~$25 billion. It cost him about 1/100th his net worth. IOW, it was cheap, less than the fluctuation in his net worth many days.
The Musk deal was not in any way equivalent.
"Musk needs to get his ass back into the real world, and he needs to do it fast."
Not while he owns SpaceX.
Who would be insane enough to overpay as much as Musk did? I'd assume various shady nation state investors looking to own a big piece of a new right wing propaganda machine. The ROI is pretty huge for them.
Is it, though? I wonder.
I mean, Twitter is now under the control of a right-wing edgelord who does what his whims dictate, and won't listen to his partners.
If you're the sort of shady nation state investor who wants twitter to be a right-wing propaganda machine, Twitter is already in a state that suits you pretty well, and it cost you nothing to get that. Would chipping in help matters anyway?
Say you cough up $13Bn for a chunk of Twitter equity at the bonkers valuation that EM is pitching. What does this buy you, really? The company is still EM's plaything, run at his whim. That $13Bn doesn't buy you majority control, so you're still just a passenger, going wherever EM cares to drive you.
You can get that for free. Maybe you'd rather do something else with that 13 Bn?
It's exactly because Twitter is now EM's plaything. If Russia pours a ton of money into Twitter, which causes Musk to become a full fledged Russia fanboy and spend his time virtue signaling to the right wingers in the US that we need to abandon the Ukraine, which then ends up causing a major shift in US policy if they regain power, was $54 a share a high price for Russia?
I suppose it could make sense to bail out Twitter if you fear that bankruptcy and receivership are looming, and that it could end up under the control of wokes.
But if you think the company is likely to go bankrupt, wouldn't you want to be a creditor and not an equity holder? Not a bankruptcy expert or anything, but in general doesn't bankruptcy mean that the equity holders get cleaned out and the company is delivered to the creditors?
Should something like Twitter be expected to make money? If it's intention is to be a public square, the public square doesn't make a profit, it's there because it's nice, because it's convenient and it facilitates society, but no one buys a ticket for it.
Can Twitter be re-cast as a non-profit, or a kind of public/private consortium like the TVA?
Social media companies aren't in the business of being a public square. They're in the business of finding ways to monetize the data collected when people use their platform, principally through targeted advertising. How you could effectively run a social media company as a non-profit and be able to effectively police content and so on, I'm not sure.
But they will often claim that's what they're doing, and a lot of the people who use Twitter habitually, like a lot of news people, use it for just that.
It's monetizing it that's become Twitter's problem, they aren't making a profit, and they may never have, and even though a lot of people find value in it I can't imagine enough of them would ever pay for it.
So, what will preserve it?
You'd run it like the post office is run, to be that public square instead of a data scraper. Never gonna happen of course, but in a sensible world, it might be.
To turn Twitter into a nonprofit, wouldn't you first need to find owners who were willing to forgo the expectation of profit from their ownership stake?
Sticking a pin in all the issues about turning Twitter into a qualifying 501(c)(3), that seems like a pretty big deal-breaker. Last time that company changed hands, it was valued at something like 44 billion USD. Who's looking to donate 44Bn to the public good, and can't think of a better way to spend it than on a playground for shitposters?
What exactly is Musk's business plan with Twitter? He's decimated the workforce, leaving a bare-bones skeleton crew barely keeping things together with bailing wire and duct tape. He's letting rightwing trolls and grifters have more or less free run of the place. What new features and functionalities can he build out to bring back (bluecheck paying) users and advertisers? None. He fired all the people who possibly knew how to do that.
Twitter's still limping along from sheer inertia at this point, but any sane investor has to see that Musk really has no realistic plan to turn it around and that anything he tells you is almost certainly bullshit. Ask the people who backed his tunnelling project.
I had the impression that selling a tunneling project to various cities was a fairly inventive way to shut down any effective moves by those cities towards mass transit and away from electric cars.
If that was Elon's intention, then it was pretty strategic. However, I doubt that he actually thought things through that far. I agree with @ different_name, in the sense that I think Elon seems to be impulsive, irresponsible, and actually has an aversion to single-mindedly following things through to completion.
"The Boring Company". I'm sure he laughed at that name, since all companies become boring to him after a few months. Just as soon as the new excitement wears off and the hard work has to begin.
This criticism is very odd, since the reason I would never work for him (I know people who have) is that he works insane hours and expects his employees to keep up with him.
At one point, he had a cot at the Tesla factory in the East Bay, while they were working through bring-up issues.
On top of that, the dude is obsessive to the nth degree. I'm pretty sure "The Boring Company" was meant to describe how he imagined other people would think of it.
You know, there's plenty of stuff to be unhappy with him about, I'd just like it to be accurate.
Just what a stockholder wants, a sleep deprived CEO down in the paint room debugging the software. Call me old fashioned, but I prefer managers that make careful plans that work and hirer competent subordinates over ones who prefer to used half assed plans to create chaos so they can jump in and start killing snakes.
But they'll be special value-added shares, you know, with blue checks--
Based on a 5 minute Google search, The Tweety debt structure is as follows: $6.5B Sr secured Term loan, $0.5 Revolver, $3B secured Bridge Loan, and $3B unsecured Bridge Loan, with the Bridge loan interest rate spreads increasing over time, providing an "incentive" to refinance.
https://twitter.com/energycredit1/status/1591873061149614106?lang=en
It is my understanding that this is a "hung" syndication, whereby the lead banks have not been able to syndicate their positions and reduce their exposure. I also heard that one of the equity investors, Fidelity, has already marked down the value of their equity stake by 56%.
https://www.reuters.com/technology/fidelity-marks-down-value-twitter-stake-by-56-2022-12-30/
Best of luck Elmo!
Tesla made $12.6 billion in profit last year. Musk can do what he wants
Elon doesn’t believe in advertising. None of his companies advertises to a significant extent. Tesla abolished its public relations department. Yet Elon bought a company that was in the business of selling advertising. Predictably the first thing he did was drive off most of the advertisers and replace the lost advertising fees with an 8 dollar user fee. Like a lot of the entrepreneurial would be geniuses I worked for in my career, Elon has no idea what his actual skill set is, i.e. what he is good at and what he totally sucks at.
Tesla abolished its PR department because he got tired of being asked uncomfortable questions by pesky journalists. Didn't have much to do with advertising.
Maybe not, but both reflect Elon’s preference to deal with the technical issues of running a business while avoiding any of the social issues. Communication seems to be something he finds difficult except for the notable exceptions of self-aggrandizing tweets and new product meetings for his worshiping fans.
In many ways, Musk is the new Jobs. He can bend reality with his mind.
Putin will bail him out.