> While Elon is the only one with the intuition to bail out a company as large as Twitter
What intuition? Wasn’t he forced to buy Twitter by the SEC? He bought it at 4x the valuation - Twitter’s ex-shareholders made it out like bandits. Now he is losing money hand over fist thanks to Twitter - as Twitter’s ad revenue has dropped due to his changes (and big mouth) and he is paying to the tune of 1 billion USD a year in interest from the loan to buy Twitter; Twitter’s yearly income on the best of years have come nowhere close to a billion.
> I like the theory that he's planning to discharge all of the debts he's run up in one fell swoop with a bankruptcy filing.
And that theory is incorrect. If Twitter goes into bankruptcy, the shareholders are wiped out. Ownership goes to the banks. He could be trying to drive the cost of the debt down (supposedly already down 40% on the open market), so he can buy it. But, the banks aren't stupid. He will absolutely have to pay a premium to buy it back.
There is another card Elon could play - which is not pay the loan and force the banks to declare bankruptcy. Do the banks really want to own Twitter? Can they kick out Elon, get competent management and somehow make themselves whole on the loaned money? That's certainly a scenario, but one that can't look appealing to the banks.
> It was thus the Twitter major shareholders & leadership that caused this situation.
The Twitter shareholders forced Elon Musk to create a $13 Billion loan to buy Twitter?
That's a pretty nuts take, ya know? The deal was designed by Elon Musk. If market conditions change between March and October, that's not Twitter shareholder's fault, that's Elon Musk's fault for failing to see how the economy would shift.
Once Musk signed the paper in April, it was over. The company was his, no matter how much he tried to squirm or get out of it. To think otherwise is to treat him as some kind of idiot who is incapable of accepting deals or making decisions for himself.
> For what I can tell, Elon bought Twitter to take it off the stock market, fix it as a private company, creating growth and profitability, and then list it later to make his money back.
A reminder that Elon had to be sued into buying this company.
> All Elon has done by buying Twitter is reveal how much of a trash company it was internally.
Except that's not true at all. What he did is saddle it with a bunch of debt and fire of a bunch of really-poorly-considered cosr cutting and revenue enhancement ideas that clearly weren’t thought through or part of a coherent strategy.
He might have and end-game vision, but he had no plausible roadmap to deal with the sucking wounded he inflcted with the acquisition, much less to get to his end-game vision.
> Bankruptcy could still happen of course, even if Elon still has the money. He might think that completely shutting down Twitter is less embarrasing than selling it for a 90% loss, Elon is still pretending to be a business genius after all.
We do not know the reality. He has cut the payroll significantly (despite the severance since that is a 1 time burden), he has added paying customers with Blue, and by killing the API, he increases those paying customers. He can also browbeat or schmooze some large customers like Apple to advertise more. It may not be enough but a smaller profitable or cash flow positive twitter could still run for a while before he feels the pinch.
Not sure if he can make the billion dollar interest payments, but imagine if twitter can make 800M, and his Tesla stock goes up double, he would not feel a pinch bridging the remaining 200M although he may try to get someone else (or the company) to pay for it.
> Say what you will about Elon and Twitter, but he definitely proved that the majority of the engineers at Twitter were adding no value to the company.
Unless you care about revenue, which has been crushed due to Elon's actions. The company is less healthy than a year ago and still coasting on reserves of previous work and network effects. Musk is spending billions, and refusing to pay valid debts, just to keep the lights on. He admits that the company might end up bankrupt.
It blows my mind that anyone could be touting this as a well run business that others should emulate.
> But, I wonder; are these the same people (managers) that were making decisions that allowed the company to loose $4 million a day?
Twitter is losing US$4 million a day now, with the added interests Elon has to pay back on his US$ 1 bi loan to buy Twitter. So using this claim as a justification is exaggerated, by the sheer fact that most of that US$ 4 million figure is from Elon's own creation.
>Can he actually off the debt without endangering his other businesses? Do you really think 1 billion yearly loss is something he can be comfortable with? His worth is in propery and businesses mostly, he does not have it sitting in a bank. That is the thing. He needs to maximize profits in order to ... not be in huge loss.
Yeah, I think he could realistically run twitter as a non-profit if we wanted, and eat the cost until he died. He owns half of SpaceX worth ~125 billion, and could sell $1 billion per year indefinitely without losing control.
The reality is that he obviously doesn't want to have twitter as money sink (reference intended).
He is no stranger to losing vast amounts of money in the short term, so I personally don't think panic is driving his behavior. Rather, I think this is simply what a hostile Elon takeover looks like and how he operates. That is to say, like a bull in a china shop with full media coverage.
There will be flailing, bold claims, pivots, mystery, and intrigue. Underneath that, the real work will be a radical restructuring and gutting of the existing corporate culture.
> But Elon has stated numerous times his reason for the takeover is not for economic reasons.
This is a hedge. If Twitter loses money Elon will say "I wasn't trying to make money"; and if Twitter makes money Elon will say "I made money despite not even trying". Win-win.
> So what is the difference between Musk and the previous shareholders? The main difference is that Musk put an enormous cost on the business which will be borne by twitters users and advertisers, and that cost brings twitter nothing more than having musk as an owner.
> By himself musk may be no better or worse than the previous shareholders. But just for him to rule over twitter is going to cost twitter a lot of money that will probably reduce the quality of the service.
It seems to me that his product-focused ownership (remember, he's a big user of Twitter) will either make it better or he will run it into the ground (due to naïvety and incompetence in this domain). Both seem like a win/win situation to me.
I think he has very strong incentives to make Twitter better because it is his stage, both for marketing his companies but also to stay int he limelight (ego).
> but strictly from a business point of view, buying Twitter for the purpose of profiteering was a bad one, but at his level, money has become irrelevant, its more about control here.
Agreed. Bezos, Gates, Musk, etc don't buy media companies for money. They buy it for influence, propaganda, etc.
> Having said that I do question how far he would be able to take the free speech thing as a private company.
I like Musk and generally support things he is trying to do. But I'm not holding my breath. No way he allows twitter to be a free speech platform. Nobody spends $44 billion to allow others to have their say. Nobody spends $44 billion for other people's benefit. Maybe he'll make some symbolic gesture like letting trump back on the platform, but I'm guessing twitter will be his personal megaphone to push his products mostly.
Or maybe this is a watershed moment and elon's purchase of twitter is the start of a shift back to what the internet/social media used to be.
> It seems to me Twitter's being run these days by an entrepreneur who's trying hard to figure out ways to make it a profitable operation.
Twitter was only losing 200-million in 2021.
The $1.3 Billion in loan-payments, followed up by the $2.5 Billion loss in advertisement revenue means that Elon Musk is personally responsible for a NEGATIVE $3.8 Billion differential in just 9 months of running the company.
You realize that, right? Twitter has _NEVER_ in its history lost this much money before.
I'm not sure how long it can go losing money like this. But I know it can't lose money forever, especially in a rising interest-rate environment, and double-especially on private equity. Eventually, Elon Musk will cut his losses and just shut the whole thing down.
So I'm not going to place a time-limit on when this all collapses and Elon Musk gives up on the project. I mean, I've seen how he dealt with SolarCity (a shady merger into Tesla to hide the fact that that other company also collapsed). So maybe Twitter "survives" through technicality in any case. Musk is very good at making failures look like a success (aka: exploded rocket was a successful test effect), he'll find a way to declare this $3.8 Billion / year loss a success too and have his fans eat up his story.
But I've already made my opinion up about this situation. Anyone who takes a company who is losing $0.2 billion/year and turns it into a company losing $3.8 billion/year in 9 months is... not a good businessman.
> I'm not sure what Elon was thinking when he even decided to buy Twitter.
He lives off Twitter. His fame and fortune would not be where it’s without Twitter and he very well knows it. You can label that an emotional connection or even personal. I don’t think he out right planned to buy it. One thing after another, he found himself locked into - buying it.
This is no where near the same situation. When Elon originally put is offer to buy Twitter, Twitter didn't even want to sell. Then the market crashed and all the sudden Elon's own offer was almost double of the "fair market price" for Twitter.
Elon would be insane if he made the same offer today.
> If you think about it, this could be a relatively cheap way of mortally wounding Twitter. Make a buyout offer, get access to the books, prove they're lying about DAU/MAU, walk away with no termination fee paid, watch the executive team get sued into oblivion and the company tanks
That's true, but what does Elon gain from destroying Twitter?
I'd argue that Twitter actually was (and still is) a big part in building his cult of personality. Sure, it has its problems, but I honestly believe that he thinks he can improve Twitter.
> I may be wrong on the finances then, as I had read on how Twitter was sinking in debt and Elon didn't know how bad it was, hence the firing. I thought most of the money came as investments from companies/people.
Where on earth did you read that? Like, I mean, (a) it’s not correct (it has a lot of debt now due to debt taken out as part of the leveraged buyout, but it didn’t before) and (b) it _could not be correct_; Twitter was a public company! Musk absolutely knew its financial situation before the takeover, or at least had no excuse for not knowing it. Anyone could just look that up; it’s part and parcel of being a public company. Is there some sort of Musk fanfiction financial news website that publishes this stuff or something?
Anyway, wherever you read that, I would be _extremely_ sceptical of anything else it writes, if I were you.
> That’s why in a free marketplace, Elon asserted his free speech to take over Twitter due to their perceived poor management.
That’s not really accurate. Twitter’s management took Elon to court to force him to take over so the stockholders they worked for could reap thr windfall ofnthe premium price he regretted offering and tried to tun away from.
What intuition? Wasn’t he forced to buy Twitter by the SEC? He bought it at 4x the valuation - Twitter’s ex-shareholders made it out like bandits. Now he is losing money hand over fist thanks to Twitter - as Twitter’s ad revenue has dropped due to his changes (and big mouth) and he is paying to the tune of 1 billion USD a year in interest from the loan to buy Twitter; Twitter’s yearly income on the best of years have come nowhere close to a billion.
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