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Twitter Turning Into X Is Set to Kill Billions in Brand Value (www.bnnbloomberg.ca)
submitted 3 years ago by to c/technology@beehaw.org
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An estimated $4 to $20 billion in value, what is he thinking?

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[–] [S] 42 points 3 years ago (6 children)

I'm inclined to agree with others here in the thread. I honestly don't think this was an intentional action designed to tank Twitter. It may well be doing just that, but frankly, Elon has proven time and again that he's a world-class idiot.

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  • [–] 19 points 3 years ago (5 children)

    Musk did not pay $44 billion to buy Twitter. He paid $26 billion, underwritten by stock in Tesla, which subsequently lost significant value. $5 billion was from other investors including the Saudi Prince.

    The remaining $13 billion was a loan Twitter took out to buy itself on Musk's behalf. Even before Musk started tanking the revenue, Twitter could not afford that debt - the interest alone was comparible to its revenue. That debt is probably about what Twitter is worth right now after the name change, making it pretty much unviable as a business.

    You don't have to look at Musk's antics to conclude that the intention was to kill the company. You only have to look at the financials.

    Leveraged buyouts almost always lead to the business closing. It's how Toys R Us, and many other staple brands, were brought down.

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  • [–] 5 points 3 years ago (2 children)

    What does it mean for Twitter to take out a loan to buy itself?

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  • [–] 11 points 3 years ago

    It means Musk & co only paid $31 billion, and only paid tax on $31 billion, while Twitter gets saddled with $13 billion in debt.

    $44 billion was required to buy Twitter and pay off existing shareholders. The argument is that under the new ownership the new owners would be able to direct Twitter to take out a loan to further the business, however in practice they avoid tax and saddle the business with debt that it can't afford.

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  • [–] 5 points 3 years ago

    It's the same thing that happened to Toy's R Us, a group of investors bought the company using the same sort of deal, then they couldn't pay it back and poof, no more Toy's R Us.

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  • [–] 4 points 3 years ago (1 child)

    Tesla stock is worth more now than when Twitter went private.

    And if Musk intended to kill Twitter, he would have simply shut down the servers last year.

    What you are seeing is the result of mistakes, not a conspiracy.

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  • [–] 1 point 3 years ago

    I might not have all the details right, it isn't 100% clear if Musk sold his Tesla shares or underwrote the purchase with them. There is a Reuters article that breaks it down, however I have seen some conflicting reports. The article claims he raised $20bn by selling stocks, then had to raise $2-3bn elsewhere (his existing Twitter stock was worth $4bn).

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