Or "Why Twitter was Down $10 in a Strong Up Day."
He bought the company for $44 billion. Here's the financing - Musk $24 billion in equity, Saudi Arabia (the guys who bonesawed a critic to finance the purchase of a platform by a guy who wants to give it more free speech is beyond ironic) $5 billion in equity, Larry Ellison $2 billion in equity, and $13 billion in loans from Wall Street banks. The interest payments on the loans are $1 billion a year. However, Twitter has never generated cash flow of more than $770 million.
He's got to find the cash flow someplace. That's why he's lurching around, from the incompetent firings to arguing with Stephen King over whether he'd pay $20 or $8 for a blue checkmark. Complete amateur.
And revenue isn't falling because of "woke activists." It's falling because corporations are worried about the brand value of Twitter. It's more than just trolls increasing the n-bomb 5x over the weekend. Twitter put out an innocuous statement to advertisers that things weren't going to change, then Musk retweets the retarded Paul Pelosi conspiracy theory. Who wants to be associated with a sewer? Musk's behavior has given advertisers little comfort.
Tesla was down $10 today when the Dow was up 400 points. Musk partially financed the purchase by selling $7 billion in Tesla stock. So where's the other $17 billion come from? I don't know this for certain, but I'd be willing to bet that he pledged stock in a remote vehicle and borrowed against the vehicle. Rich people do that all the time. Rather than sell the shares, they pledge their shares as collateral for a loan. It makes sense. Selling stock triggers a capital gain, interest payments can be written off against income.
Why does that matter? If Twitter is going to fail, Elon is going to have sell $17 billion worth of stock to cover his personal loan. But he hasn't pledged $17 billion. He's pledged more. Perhaps 2x that amount. Banks require a cushion above the value of the loan. So if he has pledged $34 billion, that amount is declining every day as Tesla falls. If I were a hedge fund manager, I'd be shooting against Tesla and shorting the stock all day, trying to drive it down to force the banks to sell to get back their money.
Elon should have stuck to making electronic vehicles and rockets to Mars. It's easier than running a platform.
He bought the company for $44 billion. Here's the financing - Musk $24 billion in equity, Saudi Arabia (the guys who bonesawed a critic to finance the purchase of a platform by a guy who wants to give it more free speech is beyond ironic) $5 billion in equity, Larry Ellison $2 billion in equity, and $13 billion in loans from Wall Street banks. The interest payments on the loans are $1 billion a year. However, Twitter has never generated cash flow of more than $770 million.
He's got to find the cash flow someplace. That's why he's lurching around, from the incompetent firings to arguing with Stephen King over whether he'd pay $20 or $8 for a blue checkmark. Complete amateur.
And revenue isn't falling because of "woke activists." It's falling because corporations are worried about the brand value of Twitter. It's more than just trolls increasing the n-bomb 5x over the weekend. Twitter put out an innocuous statement to advertisers that things weren't going to change, then Musk retweets the retarded Paul Pelosi conspiracy theory. Who wants to be associated with a sewer? Musk's behavior has given advertisers little comfort.
Tesla was down $10 today when the Dow was up 400 points. Musk partially financed the purchase by selling $7 billion in Tesla stock. So where's the other $17 billion come from? I don't know this for certain, but I'd be willing to bet that he pledged stock in a remote vehicle and borrowed against the vehicle. Rich people do that all the time. Rather than sell the shares, they pledge their shares as collateral for a loan. It makes sense. Selling stock triggers a capital gain, interest payments can be written off against income.
Why does that matter? If Twitter is going to fail, Elon is going to have sell $17 billion worth of stock to cover his personal loan. But he hasn't pledged $17 billion. He's pledged more. Perhaps 2x that amount. Banks require a cushion above the value of the loan. So if he has pledged $34 billion, that amount is declining every day as Tesla falls. If I were a hedge fund manager, I'd be shooting against Tesla and shorting the stock all day, trying to drive it down to force the banks to sell to get back their money.
Elon should have stuck to making electronic vehicles and rockets to Mars. It's easier than running a platform.
