dudalb
Penultimate Amazing
I think the inquirer does not have a great knowledge of how a large business operates.
Merged Musk buys Twitter!/ Elon Musk puts Twitter deal on hold....
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I think the inquirer does not have a great knowledge of how a large business operates.
arthwollipot
Limerick Purist
No. Why would there be?
I Am The Scum
Philosopher
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If you insist
But it's pretty intuitive when you think about it. Musk paid a lot of money to acquire Twitter. From whom did he acquire it? The former owners (shareholders). What do they get in return? The buyout cash, of course.
Cosmo
Radioactive Rationalist
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Twitter gained about $13 billion in debt as a result of the acquisition, and owes $9 billion in interest on that debt over the next 7-8 years, or a bit over $1 billion in interest alone per year.
For comparison, pre-acquisition, Twitter paid about $23 million in interest expenses in the quarter ended June 30. Twitter has lost money in 8 of the last 10 years, and has not recorded a profit since 2019. Source for the above.
It sure looks like an extremely bad deal for Musk and Twitter, but a pretty great outcome for Twitter's shareholders, who were paid far more than the company was worth.
d4m10n
Penultimate Amazing
IsThisTheLife
Banned
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Twitter's share prices began sliding in 2019 and there was little chance of reversing the trend as long it continued haemorrhaging cash in its wage bills, the result of a strategy to skew it politically by stuffing it with thousands of highly paid but barely (if at all) competent 'moderators' and "trust and safety officers" who ticked the right boxes on their applications.
Literally a case of quantity over quality being the only way to achieve the goal of turning it to a neoliberal echo chamber/propaganda machine.
I reckon this (the company's problems balancing the books) would have been foreseen, but the price was worth it - although they didn't get the queen b!tch into the Whitehouse, Orange Man was later successfully removed and the Biden puppet regime installed.
Musk probably wasn't anticipated, but one way or another, by someone or other, things had to be taken in hand and all the dead weight the company was carrying sloughed off.
It's now academic IMV - the damage has already been done (mission accomplished).
Literally a case of quantity over quality being the only way to achieve the goal of turning it to a neoliberal echo chamber/propaganda machine.
I reckon this (the company's problems balancing the books) would have been foreseen, but the price was worth it - although they didn't get the queen b!tch into the Whitehouse, Orange Man was later successfully removed and the Biden puppet regime installed.
Musk probably wasn't anticipated, but one way or another, by someone or other, things had to be taken in hand and all the dead weight the company was carrying sloughed off.
It's now academic IMV - the damage has already been done (mission accomplished).
jeremyp
Philosopher
Nobody said he gave Twitter a comically large infusion of capital. It's Twitter's shareholders that got the $44 billion, not Twitter. I should say "Twitter's ex-shareholders". They've all gone now and taken Musk's money with them.
ETA: Ninja'd quite comprehensively.
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jeremyp
Philosopher
Twitter made a profit in 2019, so at that time it was not haemorrhaging cash.
If you're going to try to gaslight us, make sure your factoids are not so easily refuted in future.
He bought the company - so it was the previous shareholders that benefited from him over paying. To fund the purchase as well as his own money and other investors’ money Twitter took on additional debt (that’s a corruption of capitalism that shouldn’t be allowed but that’s a very different topic).
ETA: Quint Ninja’d!
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jeremyp
Philosopher
More legal troubles for Musk.
https://www.bbc.co.uk/news/technology-63897608
He's turned conference rooms at Twitter HQ into bedrooms for staff
I suspect he had to delete that because people were asking how he was able to present the Tesla semi re-unveiling in Nevada whilst working and sleeping in Twitter's office in San Francisco.
https://www.bbc.co.uk/news/technology-63897608
He's turned conference rooms at Twitter HQ into bedrooms for staff
I suspect he had to delete that because people were asking how he was able to present the Tesla semi re-unveiling in Nevada whilst working and sleeping in Twitter's office in San Francisco.
Except it didn't
During 2019, Twitter shares were trading in the 30-35 range. There was a dip in February/march 2020 when they went down to 25 (along with the rest of the market thanks to the pandemic) but they closed out the year over 50 before hitting over 70 in February 2021.
Musk paid 54.20 a share, nearly double the price in 2019, when you claim that the price began sliding.
What is amazing is how such conspiracy theorists can hold two contradictory facts at the same time and somehow think they support each other. We get told that businesses aren’t “virtuous” it’s all about the profit, apart from Twitter….
I Am The Scum
Philosopher
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The shareholders sold the company for more than they paid for it. That is literally the opposite of going broke. "Get woke go broke" is just a dumb thought-terminating cliche, and you fell for it. Wake up.
Fast Eddie B
Philosopher
Gulliver Foyle
Philosopher
That's what always happens when you buy a publicly traded compajy, in fact when you buy any company with any sort of ownership structure.
d4m10n
Penultimate Amazing
You seem to be discounting the possibility of treasury stock, which just happens to be correct in this case.
Seems like a good move for the esrtwhile stockholders but a bad move for the company itself. I suppose this is what happens when we focus on fiduciary duty above all else.
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jeremyp
Philosopher
The stock holders weren't responsible for structuring the deal that way, the buyers were. It's actually not that uncommon to do this and does have some advantages for the new owners. Interest payments can be offset against tax, unlike dividends. On the other hand it can be quite risky. Toys R Us was sold in 2004 for about $7 billion and that was financed by loading the company with $5 billion of debt. Manchester United was bought by the Glazers for about £700 million and ended up with £275 million of new debt as a result.
Personally, I think it is a despicable tactic. Not only does it load additional debt on a company that is usually not doing very well in the first place, but it limits the liabilities of the buyers. If Twitter goes bankrupt, the banks that loaned Musk the money to buy it will be creditors of Twitter and it's not Musk's personal responsibility to pay back the debt.
lobosrul5
Philosopher
Are you sure about that? I read somewhere that Musk had to pledge shares of Tesla against the loans. Some of the biggest banks in the world gave him loans, and they aren't managed by morons.
see: https://seekingalpha.com/article/4503494-tesla-stock-as-collateral-to-buy-twitter-avoid-buy-the-dip
If you've ever read the detailed account of Toys R Us demise its one of the greatest or worst, tails of corporate raiding of all time.
Cosmo
Radioactive Rationalist
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This is a gross misunderstanding of what Twitter (the product) is and what is being sold to advertisers.
Twitter earns about 90% of its income from advertising. Advertisers do not want their ads to appear next to hate speech, racism, or (especially since Elon un-banned them) neo-Nazi screeds.
The content moderators you are so quick to dismiss are quite essential to Twitter's ability to attract advertising income, and therefore to its continued existence. It's really just that simple.
As Nilay Patel put it in his widely-circulated article:
Nilay Patel said:
It shouldn't be a surprise that the largest ad agencies are advising their clients against advertising on Twitter. Twitter is now a poorly-moderated festering pit of hatred, and that environment is anathema to advertisers.
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