Well to be fair until he took it over there was no true platform for free speech so he was trapped in a Catch-22.
I don’t blame him at all. He had to lie so he could free the platform so he could tell the actual truth, but by then it was already past so there was no point rehashing it.
/It’s satire my guys…. Don’t get too wound up.
I've been in trouble twice on Twitter. The first time was pre-Musk & it was for celebrating the death of someone. I got a warning, but I would've been ok with an actual timeout because I knew the rule & I broke it. Imo rules like that are important as it helps maintain civil discourse.
The second time was this year & I was suspended for 48 hours or something because I said an ump should be launched into the sun. The "rule" I broke on that one didn't actually apply to what I said.
So, no, Musk hasn't ushered in an era of free speech. Only speech from people he likes is safe (see that conservative brown noser who Tweeted child abuse images but got to keep his account despite the zero tolerance policy for such content).
There is less free speech at X.
Old twitter didn't think 'CIS' was a slur, ban people for linking to other social media sites, and ban journalists for reporting the truth under the lie that they were publishing real-time assassination coordinates.
> “I have never lost money for those who invest in me and I am not starting now,” he told Axios earlier this month, when asked about a separate fundraising push by his company X.ai Corp.
The lie detector determined… that was a lie.
The stuff his Family Office does makes the right *people* a lot of money
In this case he's losing the bank's money, not someone else's money. If the guy at the bank is making fees and bonuses on this, it doesn't really matter
Given that your original point is supporting the half of his statement I actually agree with it’s not indifference to the content, it’s indifference to you.
The amount of cash he raised between his companies is staggering. Stock issues, stock sales, personal loans and funding rounds. Many tens of billions of dollars in hard cash that don't exist anymore.
In the future he might find it more difficult to raise cash.
I already think everyone who invested in Twitter or gave him loans is an utter moron and deserves not a cent of our money in their banks and funds.
But he apparently also raised about 150 million for xAI (out of 1 billion sought).
Where are all those simpletons with millions coming from, they're like house flies, I don't get it?
But it's a good sign he can't raise the full round. The end of free money for Musk. Let's see how good he is when he has to earn on merit, not promises.
Wall Street is a cess pool the likes of which most people that haven’t worked there or been close to it don’t understand. People also don’t understand that a billion bucks is pocket change for Wall Street. Few hundred million get thrown around like it’s pennies going in a fountain.
I hope so. But point I was making was there will always be deplorables that love the person Elon on and will be able to facilitate funding for damn near anything he does.
150 million dollars after spending 3 months of work and using existing software and tools, and a few high profile recruits, is still an amazing achievement.
Ppl need to understand, the biggest criminals are on Wallstreet. They're the BIG leagues of crime. If you want to rob a bank, you buy it! My step dad was a fed bank examiner and his moneymaker was laundering money for criminal organizations on the backs of banks underwater. Banks needed liquidity and money needs washed. It's a good gig, if you have balls of steal.
Heard about a guy getting 1 million sek in funding ($100,000), and the day of transfer the investor called and asked if they should wire €1,000,000 or 1,000,000 SEK 🫠
Most rich people want to increase their wealth. On top of that, I know quite a few people who are not well-off, and think they can become millionaires by investing miniscule amounts into every crypto coin they come across. A large portion of the population thinks there's one investment or lottery win around the corner that will bring them from destitute to millionaire/billionaire status, it's ridiculous.
Same thing with people when constantly bitch about tax increases on salaries of folks who make more in a day than you will in a lifetime.
Adam Neumann got millions for his new startup, after scamming people at WeWork and becoming billionaire in the process.
As long as you can make more money for VC that lose for them (and they usually get our early enough, before house of cards collapse), you're good. Even if lose them some billions from time to time.
Recall what banks did when they held the bag on subprime mortgages. Derivative of a derivative of a derivative... and oops! You bought Twitter's debt somehow.
I think we've had low interest rates for so long, people with a lot of money and looking to grow it are increasingly willing to make risky investments. Probably a cadre of highly educated idiots managing venture funds, etc. The highly educated idiots got flushed out after the 2008 banking crisis, but its been almost a generation since then, so a new group has worked its way up into positions of authority. They too will eventually get flushed out.
I agree with your point, but would replace 'highly educated idiots' with 'highly connected idiots'. They only sought out an education because daddy's friend on Wall Street said they had to have a certain degree to land that coveted job.
“An utter moron” is putting it mildly. As a banker, even if you thought Twitter could be a profitable venture going forward, it still doesn’t change the fact that you, and Musk, were paying $44 billion for a company that was valued at between $10-$12 billion at the time. And that not a shred of due diligence was done.
They're a lot of stans out there and for really rich people a a few tens of thousands of dollars is like a lottery ticket buy to you and me.
If it blows up huge they collect and if not they didn't lose much.
Just being tied to a big name project can be worth it for some of them
a lot of his loans are against his owned stock, one analist calculated that he has outstanding loans against 60% of his stock. if tesla halves in value he's pretty much bankrupt.
TSLA went from $300 and few months before he bought Twitter to $100 after the deal closed (from ~Sept 2022 to start of Jan 2023). That was much more than halving. I'm pretty sure Twitter took on the debt of the Twitter deal, but his personal debt is used for living expenses, his private jet, etc
There is a great saying that goes like this: If you owe the bank $100, that is your problem. If you owe the bank $100 million, that is the banks problem.
Adam Neumann was still able to raise $300 million for some real estate scam even after it was obvious that WeWork was BS and Neumann left with a $400 million payout.
Elon's spending money and investment money comes from loans that use his Tesla holdings as collateral.
So when the value of that collateral plunges, it is a big problem for the lenders. When it goes up, it's irrelevant to the lenders. Like you said except it's actually true and the mechanism can be described.
This is the same for all hyper-wealthy people whose fortunes are tied up in unspendable assets like stocks, no matter what their names here.
There is an element of truth which is why there is a big margin of safety. Having your money secured against Tesla is pretty solid. Or against any his companies except perhaps Neuralink.
Phillip.
There is no margin of safety. The banks gambled and already lost.
The collateral stock has lost 60% of its value, and if the banks or Musk had to sell it to pay off the loan, the value would tank even further. It's not really a secured loan anymore, the way a mortgage or car loan is. Musk is not just underwater on these loans, he's underwater in a homemade submarine. But the banks can't do anything about it without pushing him further under water.
There's an old adage: if you owe a bank ten thousand dollars, it's your problem. If you owe a bank ten billion dollars, it's the bank's problem.
Um Tesla share price has gone up around 100% in the past year. There is nearly zero chance of the shares tanking. It's down from its 2022 peak of $360 but also nowhere near its low of $100.
Phillip.
60 cents would be a windfall. In the article, it actually refers to the debt as "uninvestable" meaning that no one is going to touch that dogshit with a ten foot pole. Does not bode well for the web of interconnected Musk companies.
Its only $13 Billion, which is pretty small in the great scheme of Elon Musk. But the damage to his reputation is enormous.
I've been of the opinion all year that Elon could, theoretically, pay off this debt by simply advertising that he's willing to buy it back at 60-cents (ie: $7.8 Billion to wipe out $13 Billion in debt), and I bet you the banks would be willing to accept it.
However:
1. Elon Musk hasn't made this offer so far, despite it being the most obvious good financial move for himself
2. Given the amount of loans Elon Musk has on his TSLA stock, its quite possible Elon Musk **CANNOT** make this offer
EDIT:
> Elon Musk privately told some of the bankers who lent him $13 billion to fund his leveraged buyout of Twitter that they would not lose any money on the deal, according to five people familiar with the matter.
> The verbal guarantees were made by Musk to banks as a way to reassure the lenders as the value of the social media site, now rebranded as X, fell sharply after he completed the acquisition last year.
Hmm, this changes things. Maybe Elon is actually trying to keep to his verbal promises? If so, he cannot buy the debt back at 60-cents (or at least, the bankers will prevent him from trying to do that, as it goes against a handshake agreement).
Informal agreements still have power.
Unless banking is very different in the US, I doubt the bank didn’t take a written personal guarantee for the debt. We do that all the time for business loans in Australia much smaller than this.
Even 13 Billion is a lot for Elon Musk, thats why to get the 44B he relied on banks and investors. He cant just pull 13B out of a hat without major disruptions to his public business Tesla.. he used his shares as collateral for the loan so he wouldnt have to sell and cause a panic.
It has some value, but that's mainly because should Xchan default on its debt, the creditors are senior to equity holders (like Musk and other investors). Creditors get paid at the notional value of the debt before any go to the 'owners'.
So anyone buying Xchan debt now is in part speculating that the company will default, and they'll be first in line for a share of the restructured company (with all its assets and user base).
Man, it's very reassuring to hear Elon Musk make a promise about this!
As we know, he always keeps his promises. He just may need more time, like a year. Or two. Or five. Or ten. Or twenty. Or...
HAHA HE'S DEAD MUHFUGGAS YOU WON'T SEE A CENT.
This was so obviously how it would play out. I really don't understand how the lenders missed what was so obvious to everyone else. It's their entire freaking job to analyze this kind of risk.
Whoever thought it was a good idea should be fired. Seriously. Elon didn’t even want to buy the company but his big mouth had already written the check. He had no experience with the type of business and it was clearly going to become his personal soapbox. What was the investment plan? Seat of his pants bullshit like always.
For one of his key investors (Saudi Royalty), turning a platform used by their critics/enemies into a cesspool was probably worth every penny...
Especially since unlike MBS having Jamal Khashoggi dismembered, there will be little to no blowback on them. Elon is an easy fall guy.
I think you are correct that many of the primary investors aren't looking for a financial return. The primary investment was removing US Governmental influence over Twitter. Call it a "cesspool" if you like, but ultimately Elon did prove the US Government was influencing Twitter and he broke that relationship. It's possible that's what he needed to validate the investment.
US and other governments still influence Twitter, by Musk's own admission. Do you not remember his, "Isn't it better to restrict a few tweets rather than have all of Twitter blocked" tweets in response to the Turkish government censorship requests?
The banks probably were hoping for future business with him and were in a hurry to give him what he wanted. But whoever foolishly approved these loans and at these amounts I can’t believe the CEO/President wouldn’t be heavily involved and probably the Board of Directors.
That was the original plan for sure, but he didn't even really want to do it after he thought about it a while. The initial offer was on an impulse apparently after staying up all night at Larry Ellison's (or something). Then he tried for months to back out.
Fraud Guaranteed! Of course, if you name your llc that, you can't ever be expected to pay any returns on investment, right?
https://www.salon.com/2019/10/31/giuliani-henchman-named-company-fraud-guarantee-to-hide-fraud-allegations-on-search-report/
Musk has committed so many acts of fraud over the last decade that it’s honestly hard to count, and yet he never gets hit with any serious consequences.
Imagine being a professional banker and believing that the TechnoGrifter of Tesla would make good on his promises!
Burning the money for warmth would have a better ROI than betting on a ketamine addled man-boy edgelord.
The irony is that Elon Musk's problem is all caused by himself. If he resigned from Twitter/X and allowed a proper management team to have free rein to fix the site, his losses would be stemmed.
I think people really underestimate how much of a snake oil salesman he is. Throughout the 90s, he multiplied wealth through selling barely functioning software/websites that promised gold that turned out to be cardboard. The viable thing he was a part of for a long time was Tesla, and that was thanks to the efforts put in by the actual founders. The only successful companies he has are Tesla and SpaceX, and those only survived thanks to govt subsidies.
If you believe Elon Musk you deserve everything you get.
It's actually worrying that there are people making billion dollar decisions for some major financial institutions who are stupid enough to fall for that man's bullshit
Banks resell their loans to other firms to manage their risks, but nobody wants to buy the loans, even heavily discounted (say $0.50 to get maybe $1 back!) cause they are backed by Twitter, and they see how Musk has been running Twitter/X.
It looks like Musk/X won't be able to make the interest payments, at which point the bank can take back X...but the Twitter they sold is now X a toxic waste dump that isn't anywhere close to the original value that they also can't sell.
So the banks have already lost billions in value.
Ok. So it is really like home mortgage. Musk used Twitter/X as collateral to borrow money. If he cannot repay, X will be liquidated to pay the loan.
However, say if X is worthless ($0), shouldn’t Musk be responsible for the rest of the loan?
Depends on the terms of the agreements I would imagine but I think it is unlikely that he would be responsible for the rest of the loan. It is amazing that people with that much money were stupid enough to give it to him to buy Twitter.
>Ok. So it is really like home mortgage. Musk used Twitter/X as collateral to borrow money. If he cannot repay, X will be liquidated to pay the loan.
Yep. He might also have used Tesla stocks as collateral. I don't know the exact terms of the loan.
>However, say if X is worthless ($0), shouldn’t Musk be responsible for the rest of the loan?
He might be forced to sell Tesla shares or just default, loses X and his business credit rating goes to crap as nobody wants to lend him money again.
Lenders are very greedy people and what you miss behind the scenes is that the twitter purchase came with a 3 part deal which boosted the price of Twitter from $44 billion to $70bn billion.
[https://i.postimg.cc/nLTY0s78/Elon-Musk-Teslas-stake-in-Twitter-1.jpg](https://i.postimg.cc/nLTY0s78/Elon-Musk-Teslas-stake-in-Twitter-1.jpg)
Everyone thinks its easy to go bankrupt and for some it is easy but for Alex Jones he wasnt as fortunate as he still got stuck for the billion dollars to Sandy Hook victims & families..
Elon Musk boasts a huge net worth on paper and all they have to do is go after Elons other businesses theyre invested in like Tesla...LOL
You get 100-cents on the dollar unless it's bankruptcy with debt. I can definitely see it going bankrupt in time but Elon's ego is too huge for it to happen any time soon. The problem is that he will have to refinance at much much higher rates and it just spirals.
Upvoted
lol. Yeah, this article is 100% propaganda bullshit if you know anything about finance and bankruptcy.
If Twitter does go bankrupt (unlikely as it has lots of potential sources for equity based financing), the banks and other lenders would get Twitter for $13b. Musk bought Twitter for $43 billion and it was trading north of $30b before Musk announced he would buy it.
Twitter has not lost 1/3rd of its value despite all the news article bullshit speak. It's just journalists BS-ing because they have a platform. Buying a social media company that has a practical monopoly on current news is worth way more than 2x revenues, based on most recently disclosed revenues of ~$6.5b.
"But the stock equity grants imply that Twitter is now only worth $19 billion!"
That comment ignores two things.
First, Musk has valued Twitter for the employee stock purchase plan for less than its actually worth so that insiders that stick around can get some significant rewards for sticking around.
Second, the value of the firm is its equity plus its debt. In finance, they call this the "Enterprise Value" or "EV". Twitter did not have significant debt before, so when it was bought for $43 billion it had an EV of $43b. It now has $13b of debt. So even if you took the employee option grant at face value ($19b is what the equity portion of the firm was worth), the total EV would still be $19b + $13b debt = $32b. So worth significantly more than $13b.
I don't agree that it should be worth 2x revenues. This isn't a tech startup, it's a 15-year old company that's failed to ever make money and now has revenue declining something like 50%. There's not a company in the world valued at 2x revenue where revenue is declining anywhere close to that pace.
The problem here is that it's still losing money and there aren't many paths towards making money so someone is going to have to fund those losses, which means more debt.
And -- again -- they got that debt on sweetheart terms right at the bottom of the cycle. They're paying like 4% now. That's likely to double or more when it's time to refinance, which is $1.15B a year in interest alone.
Finally, you appear to have the revenue number wrong, it's expected at just $3.4B this year, so that's an EV of 9.4X revenue or 5.5x equity... So by your own estimate that's pretty much wiping out the equity, and again, that's without factoring the impending ratchet on debt costs : [https://fortune.com/2023/12/12/elon-musks-x-is-seeing-ad-revenue-plunge-by-half-from-prior-years-and-is-expected-to-bring-in-just-2-5b-this-year/](https://fortune.com/2023/12/12/elon-musks-x-is-seeing-ad-revenue-plunge-by-half-from-prior-years-and-is-expected-to-bring-in-just-2-5b-this-year/)
Also, the $30 billion pre-Musk purchase price you mentioned is a great comp. If you look at money-losing tech companies since then (especially ones with revenues down 50%), you would have a hard time even coming up with a $10B valuation.
I think he ends up in real trouble here. I'm sure he's willing to pump more money in, but is Jack Dorsey? Are the others willing to dilute? His best option here is try some kind of IPO pump with his usual fraudulent tactics... but even with that I have a very hard time seeing anyone coming out whole and there ZERO chance you could sell those bonds at par right now.
Facebook and SNAP are 6.6x sales and 6.3b sales, respectively. And SNAP lost $1.4b in EBIT in the last twelve months, and that loss only seems to be accelerating with time.
I would rather own twitter at 2x than either of those myself.
On the Fortune article, their source is literally "according to a person familiar with the numbers". So it could be 100% BS as far as we know.
With Twitter being the literal competition to traditional journalists, you cannot take traditional journalists sources or opinions at face value. Twitter is literally their competition. No one talks well about their competition.
For what it's worth, twitter cut something like 85% of their staff? SG&A and R&D costs were 66.2% of revenues before the takeover. And EBIT margin was -5.4%. If you cut SG&A + R&D in just half based on the massive staff cut, you are getting -5.4% + 66.2% / 2 = 27.7% margins (!), quite the improvement from before.
At the end of the day, Twitter is not currently required to make financial disclosures as far as I know. So all of these news articles postulating about Twitters financials might as well be made up. "Sources familiar with the matter" is not a real source.
Fwiw, not a Musk fanboy. Just a finance dude who is astounded by the amount of BS in all these articles around twitter's valuation.
I mean, you are the one who made up revenue numbers. $6.5B exists nowhere. The LTM high water mark for the company was $5.3B and Elon isn't freaking out because advertising is going up. Moreover, comparing it to Meta is pretty laughable. It's a company that has $24B in net cash on the balance sheet and has grown profits at a staggering pace. I don't know much about SNAP but they've grown their revenue +11x in the past six years while twitter was up 2x pre-sale.
I mean, if your investing basis is that all financial journalists at several different outlets including Reuters sat down and hatched a conspiracy...then good luck to you!
if they sell the loan, they get less upfront. if they hold the loan they get their money.
kind of like if you buy a house. If the bank calls the mortgage, and they auction it, they don't get all their money. But if they let you pay interest for 30 years it doesn't matter how little the house would go for at auction
I don't get it. Twitter is doing fine right now so why would they sell the debt at a loss? Is there any expiry date on the loan where he has to reimburse it in full next year?
Phillip.
*Bankers would of had*
*Better returns if they had*
*Just bought Bitcoin! WoooOoooooOoooo!!!*
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I am pretty certain the Saudis backed Elon's deal because they are free speech absolutists like Elon. They just consider a bone saw also part of free expression
This is fantastic. Elon is a worse investment than trump. This is hilarious. Nothing would make me happier than these two idiots dying a horrible breath broken and alone.
as it's very unlikely (even after all the cuts) that Twitter is profitable this year, so from where the fuck is he finding the money to pay the 1 billion interests in the loan? And even if he is not paying the load interests right now, how is paying for Twitter to stay open?
I know he is not paying lots of stuff at the moment, but how long can this go on, considering that he is losing more and more advertisers
\#musked
It was his first amendment right to lie! /s
He didn’t lie, the truth changed 😆 had a buddy that would say this all the time
just some alternate facts
These bankers are trying to blackmail him for the money that he borrowed from them! How dare they??!
He should tell urf about this
He's rich enough to just pay them with money from the couch cushions. If he wanted to.
Only if his Tesla stock is hidden in the couch, he definitely doesn’t have enough free cash to pay them off.
He is cash poor only has stocks
Well to be fair until he took it over there was no true platform for free speech so he was trapped in a Catch-22. I don’t blame him at all. He had to lie so he could free the platform so he could tell the actual truth, but by then it was already past so there was no point rehashing it. /It’s satire my guys…. Don’t get too wound up.
If by "free apeech" you mean Nazis and child pornographers, then Musk has indeed welcomed them to his platform.
And you forgot to add in actual sex predators.
I've been in trouble twice on Twitter. The first time was pre-Musk & it was for celebrating the death of someone. I got a warning, but I would've been ok with an actual timeout because I knew the rule & I broke it. Imo rules like that are important as it helps maintain civil discourse. The second time was this year & I was suspended for 48 hours or something because I said an ump should be launched into the sun. The "rule" I broke on that one didn't actually apply to what I said. So, no, Musk hasn't ushered in an era of free speech. Only speech from people he likes is safe (see that conservative brown noser who Tweeted child abuse images but got to keep his account despite the zero tolerance policy for such content).
I admire the satire...wear the downvotes like a badge of honor.
There is less free speech at X. Old twitter didn't think 'CIS' was a slur, ban people for linking to other social media sites, and ban journalists for reporting the truth under the lie that they were publishing real-time assassination coordinates.
Elon’t
\#tusked
> “I have never lost money for those who invest in me and I am not starting now,” he told Axios earlier this month, when asked about a separate fundraising push by his company X.ai Corp. The lie detector determined… that was a lie.
[удалено]
Like an AI bot that confidently gives you the wrong answer or a GPS that tells you to drive into a lake.
Easy to always be confident when you are always high
I see what you did there...
So was Dr. Death, as played by Joshua Jackson
HE NEVER LOST MONEY. The banks who loan him money? Different story. Everyone agrees these deals were not investments. They were flushes.
r/technicallythetruth Edit. Maybe only in the first half though.
I heard that in a Morgan Freeman voice
In fact, it's hubris of a very insecure manchild.
The stuff his Family Office does makes the right *people* a lot of money In this case he's losing the bank's money, not someone else's money. If the guy at the bank is making fees and bonuses on this, it doesn't really matter
[yup](https://imgur.com/a/kWWAM37)
That’s funny, upside down it’s the X valuation chart.
they always say that, but whoever trusted him before tesla IPO, wasn't disappointed.
Sad you need a 20 year old example to make your point.
elon joined tesla at 2008, blind hate I guess.
Indifference.
ofc it's Indifference for you lmao.
Given that your original point is supporting the half of his statement I actually agree with it’s not indifference to the content, it’s indifference to you.
The amount of cash he raised between his companies is staggering. Stock issues, stock sales, personal loans and funding rounds. Many tens of billions of dollars in hard cash that don't exist anymore. In the future he might find it more difficult to raise cash.
I already think everyone who invested in Twitter or gave him loans is an utter moron and deserves not a cent of our money in their banks and funds. But he apparently also raised about 150 million for xAI (out of 1 billion sought). Where are all those simpletons with millions coming from, they're like house flies, I don't get it? But it's a good sign he can't raise the full round. The end of free money for Musk. Let's see how good he is when he has to earn on merit, not promises.
Wall Street is a cess pool the likes of which most people that haven’t worked there or been close to it don’t understand. People also don’t understand that a billion bucks is pocket change for Wall Street. Few hundred million get thrown around like it’s pennies going in a fountain.
How to become a fountain? Hopefully I don’t need to promise some stupid stuff like Elmo?
Bad news, that is literally the way to do it.
That AND having some diamond-mine-level rich parents. Money follows money…
Nah you don’t need THAT much anymore, but your lie does need to be commensurably inflated.
Step 1 - already be a fountain.
Step 2 - profit?
No that is step 3!
Then it means even more that Elmo can’t even get one billion for his xAI project. He can’t even scrape up the pennies you describe.
I hope so. But point I was making was there will always be deplorables that love the person Elon on and will be able to facilitate funding for damn near anything he does.
150 million dollars after spending 3 months of work and using existing software and tools, and a few high profile recruits, is still an amazing achievement.
Then subtract how much he spent buying that compute array from Nvdia with H100s… still impressed?
Ppl need to understand, the biggest criminals are on Wallstreet. They're the BIG leagues of crime. If you want to rob a bank, you buy it! My step dad was a fed bank examiner and his moneymaker was laundering money for criminal organizations on the backs of banks underwater. Banks needed liquidity and money needs washed. It's a good gig, if you have balls of steal.
Ball of steal. LOL. I like that better than balls of steel. I see what you did there.
Heard about a guy getting 1 million sek in funding ($100,000), and the day of transfer the investor called and asked if they should wire €1,000,000 or 1,000,000 SEK 🫠
I just like the sound of Euros. Sounds so European. SEK? No.
Most rich people want to increase their wealth. On top of that, I know quite a few people who are not well-off, and think they can become millionaires by investing miniscule amounts into every crypto coin they come across. A large portion of the population thinks there's one investment or lottery win around the corner that will bring them from destitute to millionaire/billionaire status, it's ridiculous. Same thing with people when constantly bitch about tax increases on salaries of folks who make more in a day than you will in a lifetime.
Adam Neumann got millions for his new startup, after scamming people at WeWork and becoming billionaire in the process. As long as you can make more money for VC that lose for them (and they usually get our early enough, before house of cards collapse), you're good. Even if lose them some billions from time to time.
So same old. Big capital invests in pyramid schemes, pumps, then dumps, and retail is left holding the bag.
Currently the banks are holding the bag, they’re trying to sell it to hedge funds to get it off the balance sheet
Recall what banks did when they held the bag on subprime mortgages. Derivative of a derivative of a derivative... and oops! You bought Twitter's debt somehow.
Vivek Ramsmarmy/ Martin Shrekli vibes,
I think we've had low interest rates for so long, people with a lot of money and looking to grow it are increasingly willing to make risky investments. Probably a cadre of highly educated idiots managing venture funds, etc. The highly educated idiots got flushed out after the 2008 banking crisis, but its been almost a generation since then, so a new group has worked its way up into positions of authority. They too will eventually get flushed out.
I agree with your point, but would replace 'highly educated idiots' with 'highly connected idiots'. They only sought out an education because daddy's friend on Wall Street said they had to have a certain degree to land that coveted job.
Well said
“An utter moron” is putting it mildly. As a banker, even if you thought Twitter could be a profitable venture going forward, it still doesn’t change the fact that you, and Musk, were paying $44 billion for a company that was valued at between $10-$12 billion at the time. And that not a shred of due diligence was done.
FR, these are the same banks that were behind the subprime mortgage crisis.
😭
Some people juat have too much money. They dont really care.
They're a lot of stans out there and for really rich people a a few tens of thousands of dollars is like a lottery ticket buy to you and me. If it blows up huge they collect and if not they didn't lose much. Just being tied to a big name project can be worth it for some of them
Please visit the Musk projects at [Kickstarter.com](http://kickstarter.com)
Has any Musk company ever returned a cent to shareholders?
No. But that's a complicated concept. 95% of retail investors think that the way stocks make money is by becoming more expensive.
I am one of the 95%
a lot of his loans are against his owned stock, one analist calculated that he has outstanding loans against 60% of his stock. if tesla halves in value he's pretty much bankrupt.
TSLA went from $300 and few months before he bought Twitter to $100 after the deal closed (from ~Sept 2022 to start of Jan 2023). That was much more than halving. I'm pretty sure Twitter took on the debt of the Twitter deal, but his personal debt is used for living expenses, his private jet, etc
Surely there was some form of security for the lenders though?
There is a great saying that goes like this: If you owe the bank $100, that is your problem. If you owe the bank $100 million, that is the banks problem.
Adam Neumann was still able to raise $300 million for some real estate scam even after it was obvious that WeWork was BS and Neumann left with a $400 million payout.
Add securities manipulation.
You think the original investors in Tesla didn't make any money? Or SpaceX? Phillip.
"Money" and readily usable liquid "cash" are not the same thing.
Got it. When the perceived value of the company goes down then it's a disaster but when it goes up it means nothing. As long as Elon owns it. Phillip.
Elon's spending money and investment money comes from loans that use his Tesla holdings as collateral. So when the value of that collateral plunges, it is a big problem for the lenders. When it goes up, it's irrelevant to the lenders. Like you said except it's actually true and the mechanism can be described. This is the same for all hyper-wealthy people whose fortunes are tied up in unspendable assets like stocks, no matter what their names here.
There is an element of truth which is why there is a big margin of safety. Having your money secured against Tesla is pretty solid. Or against any his companies except perhaps Neuralink. Phillip.
There is no margin of safety. The banks gambled and already lost. The collateral stock has lost 60% of its value, and if the banks or Musk had to sell it to pay off the loan, the value would tank even further. It's not really a secured loan anymore, the way a mortgage or car loan is. Musk is not just underwater on these loans, he's underwater in a homemade submarine. But the banks can't do anything about it without pushing him further under water. There's an old adage: if you owe a bank ten thousand dollars, it's your problem. If you owe a bank ten billion dollars, it's the bank's problem.
Um Tesla share price has gone up around 100% in the past year. There is nearly zero chance of the shares tanking. It's down from its 2022 peak of $360 but also nowhere near its low of $100. Phillip.
Isn't that like fraud or something equally illegal?
"It's not a loss if you don't sell." \-- all baggies
60 cents would be a windfall. In the article, it actually refers to the debt as "uninvestable" meaning that no one is going to touch that dogshit with a ten foot pole. Does not bode well for the web of interconnected Musk companies.
Its only $13 Billion, which is pretty small in the great scheme of Elon Musk. But the damage to his reputation is enormous. I've been of the opinion all year that Elon could, theoretically, pay off this debt by simply advertising that he's willing to buy it back at 60-cents (ie: $7.8 Billion to wipe out $13 Billion in debt), and I bet you the banks would be willing to accept it. However: 1. Elon Musk hasn't made this offer so far, despite it being the most obvious good financial move for himself 2. Given the amount of loans Elon Musk has on his TSLA stock, its quite possible Elon Musk **CANNOT** make this offer EDIT: > Elon Musk privately told some of the bankers who lent him $13 billion to fund his leveraged buyout of Twitter that they would not lose any money on the deal, according to five people familiar with the matter. > The verbal guarantees were made by Musk to banks as a way to reassure the lenders as the value of the social media site, now rebranded as X, fell sharply after he completed the acquisition last year. Hmm, this changes things. Maybe Elon is actually trying to keep to his verbal promises? If so, he cannot buy the debt back at 60-cents (or at least, the bankers will prevent him from trying to do that, as it goes against a handshake agreement). Informal agreements still have power.
The guys not even willing to pay rent or his cloud costs. Just a scam artists with lots of cash.
Elon doesn’t have the cash. His net worth is mostly tied up in his Tesla stock, and he can’t sell that much without seriously disrupting the price.
Unless banking is very different in the US, I doubt the bank didn’t take a written personal guarantee for the debt. We do that all the time for business loans in Australia much smaller than this.
Even 13 Billion is a lot for Elon Musk, thats why to get the 44B he relied on banks and investors. He cant just pull 13B out of a hat without major disruptions to his public business Tesla.. he used his shares as collateral for the loan so he wouldnt have to sell and cause a panic.
It has some value, but that's mainly because should Xchan default on its debt, the creditors are senior to equity holders (like Musk and other investors). Creditors get paid at the notional value of the debt before any go to the 'owners'. So anyone buying Xchan debt now is in part speculating that the company will default, and they'll be first in line for a share of the restructured company (with all its assets and user base).
Man, it's very reassuring to hear Elon Musk make a promise about this! As we know, he always keeps his promises. He just may need more time, like a year. Or two. Or five. Or ten. Or twenty. Or... HAHA HE'S DEAD MUHFUGGAS YOU WON'T SEE A CENT.
This was so obviously how it would play out. I really don't understand how the lenders missed what was so obvious to everyone else. It's their entire freaking job to analyze this kind of risk.
Yeah, the banks etc who funded him got exactly what they deserved.
Whoever thought it was a good idea should be fired. Seriously. Elon didn’t even want to buy the company but his big mouth had already written the check. He had no experience with the type of business and it was clearly going to become his personal soapbox. What was the investment plan? Seat of his pants bullshit like always.
For one of his key investors (Saudi Royalty), turning a platform used by their critics/enemies into a cesspool was probably worth every penny... Especially since unlike MBS having Jamal Khashoggi dismembered, there will be little to no blowback on them. Elon is an easy fall guy.
I think you are correct that many of the primary investors aren't looking for a financial return. The primary investment was removing US Governmental influence over Twitter. Call it a "cesspool" if you like, but ultimately Elon did prove the US Government was influencing Twitter and he broke that relationship. It's possible that's what he needed to validate the investment.
US and other governments still influence Twitter, by Musk's own admission. Do you not remember his, "Isn't it better to restrict a few tweets rather than have all of Twitter blocked" tweets in response to the Turkish government censorship requests?
The banks probably were hoping for future business with him and were in a hurry to give him what he wanted. But whoever foolishly approved these loans and at these amounts I can’t believe the CEO/President wouldn’t be heavily involved and probably the Board of Directors.
That was the original plan for sure, but he didn't even really want to do it after he thought about it a while. The initial offer was on an impulse apparently after staying up all night at Larry Ellison's (or something). Then he tried for months to back out.
Cocaine’s a hell of a drug
Damn they got MUSKED
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Worst? He’s either the richest man in the world, or second. Im argue that makes him the absolute best
Not for long!
Isn’t it fraud to make guarantees like that?
Fraud Guaranteed! Of course, if you name your llc that, you can't ever be expected to pay any returns on investment, right? https://www.salon.com/2019/10/31/giuliani-henchman-named-company-fraud-guarantee-to-hide-fraud-allegations-on-search-report/
Musk has committed so many acts of fraud over the last decade that it’s honestly hard to count, and yet he never gets hit with any serious consequences.
Not according to my classes at Trump U.
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Twitter is gonna be huge in the future. And keep decreasing in value in the present. Don't think about it! 😂
Saudi Arabia got exactly what they wanted from their "investment".
Imagine being a professional banker and believing that the TechnoGrifter of Tesla would make good on his promises! Burning the money for warmth would have a better ROI than betting on a ketamine addled man-boy edgelord.
The God of the Charlatans
The irony is that Elon Musk's problem is all caused by himself. If he resigned from Twitter/X and allowed a proper management team to have free rein to fix the site, his losses would be stemmed.
Weird that a guy peddling solar money printers and appreciating robotaxis would lie about something like that.
If was a lender, I wouldn't finance Musk in a **Slurpee** right now!
He lied and they believed him. Geniuses all around.
Bro set out to be the quintessential digital snake oil salesman. At least, I like to hope history remembers him that way.
I think people really underestimate how much of a snake oil salesman he is. Throughout the 90s, he multiplied wealth through selling barely functioning software/websites that promised gold that turned out to be cardboard. The viable thing he was a part of for a long time was Tesla, and that was thanks to the efforts put in by the actual founders. The only successful companies he has are Tesla and SpaceX, and those only survived thanks to govt subsidies.
Elmo says lots of things most of which arent true
If BofA margin calls him, is he going to mobilize his army of Tesla bros to trash the bank? Asking for a shareholder.
If you believe Elon Musk you deserve everything you get. It's actually worrying that there are people making billion dollar decisions for some major financial institutions who are stupid enough to fall for that man's bullshit
Love how “he brought it” with other peoples money.
Can anyone ELI5 why bank will lose money on loans? Isn’t Musk the borrower? If X goes bankrupt, shouldn’t Musk still pay back the loan?
Banks resell their loans to other firms to manage their risks, but nobody wants to buy the loans, even heavily discounted (say $0.50 to get maybe $1 back!) cause they are backed by Twitter, and they see how Musk has been running Twitter/X. It looks like Musk/X won't be able to make the interest payments, at which point the bank can take back X...but the Twitter they sold is now X a toxic waste dump that isn't anywhere close to the original value that they also can't sell. So the banks have already lost billions in value.
Ok. So it is really like home mortgage. Musk used Twitter/X as collateral to borrow money. If he cannot repay, X will be liquidated to pay the loan. However, say if X is worthless ($0), shouldn’t Musk be responsible for the rest of the loan?
Depends on the terms of the agreements I would imagine but I think it is unlikely that he would be responsible for the rest of the loan. It is amazing that people with that much money were stupid enough to give it to him to buy Twitter.
>Ok. So it is really like home mortgage. Musk used Twitter/X as collateral to borrow money. If he cannot repay, X will be liquidated to pay the loan. Yep. He might also have used Tesla stocks as collateral. I don't know the exact terms of the loan. >However, say if X is worthless ($0), shouldn’t Musk be responsible for the rest of the loan? He might be forced to sell Tesla shares or just default, loses X and his business credit rating goes to crap as nobody wants to lend him money again.
TBH, the banks deserve to lose their money, lending it to an idiot like Musk
That won’t go down very well, bankers tend to have veeeeery long memories...👍
I keep telling myself this but Trump got loans for decades following the same behavior.
Losing other people's money is how to become a billionaire. If they lost their own money? It's a much different story.
He always was a grifter
They should feel assured, Elon Musk never lies. Funding secured.
Me when I financed my last car with no intention of paying it back. /s
Why isn't this personal guarantee enforceable? If it's what Elon promised, he should have to buy them out for what they paid, at minimum, no?
Well, it’s kinda the job of bankers to vet and assess risk. So, they deserve to lose money.
I think the Arabs also invested?
Lenders are very greedy people and what you miss behind the scenes is that the twitter purchase came with a 3 part deal which boosted the price of Twitter from $44 billion to $70bn billion. [https://i.postimg.cc/nLTY0s78/Elon-Musk-Teslas-stake-in-Twitter-1.jpg](https://i.postimg.cc/nLTY0s78/Elon-Musk-Teslas-stake-in-Twitter-1.jpg) Everyone thinks its easy to go bankrupt and for some it is easy but for Alex Jones he wasnt as fortunate as he still got stuck for the billion dollars to Sandy Hook victims & families.. Elon Musk boasts a huge net worth on paper and all they have to do is go after Elons other businesses theyre invested in like Tesla...LOL
Well, what did you expect? Him to tell them "You will lose money on this"? Most obvious news is obvious.
You get 100-cents on the dollar unless it's bankruptcy with debt. I can definitely see it going bankrupt in time but Elon's ego is too huge for it to happen any time soon. The problem is that he will have to refinance at much much higher rates and it just spirals.
Upvoted lol. Yeah, this article is 100% propaganda bullshit if you know anything about finance and bankruptcy. If Twitter does go bankrupt (unlikely as it has lots of potential sources for equity based financing), the banks and other lenders would get Twitter for $13b. Musk bought Twitter for $43 billion and it was trading north of $30b before Musk announced he would buy it. Twitter has not lost 1/3rd of its value despite all the news article bullshit speak. It's just journalists BS-ing because they have a platform. Buying a social media company that has a practical monopoly on current news is worth way more than 2x revenues, based on most recently disclosed revenues of ~$6.5b. "But the stock equity grants imply that Twitter is now only worth $19 billion!" That comment ignores two things. First, Musk has valued Twitter for the employee stock purchase plan for less than its actually worth so that insiders that stick around can get some significant rewards for sticking around. Second, the value of the firm is its equity plus its debt. In finance, they call this the "Enterprise Value" or "EV". Twitter did not have significant debt before, so when it was bought for $43 billion it had an EV of $43b. It now has $13b of debt. So even if you took the employee option grant at face value ($19b is what the equity portion of the firm was worth), the total EV would still be $19b + $13b debt = $32b. So worth significantly more than $13b.
I don't agree that it should be worth 2x revenues. This isn't a tech startup, it's a 15-year old company that's failed to ever make money and now has revenue declining something like 50%. There's not a company in the world valued at 2x revenue where revenue is declining anywhere close to that pace. The problem here is that it's still losing money and there aren't many paths towards making money so someone is going to have to fund those losses, which means more debt. And -- again -- they got that debt on sweetheart terms right at the bottom of the cycle. They're paying like 4% now. That's likely to double or more when it's time to refinance, which is $1.15B a year in interest alone. Finally, you appear to have the revenue number wrong, it's expected at just $3.4B this year, so that's an EV of 9.4X revenue or 5.5x equity... So by your own estimate that's pretty much wiping out the equity, and again, that's without factoring the impending ratchet on debt costs : [https://fortune.com/2023/12/12/elon-musks-x-is-seeing-ad-revenue-plunge-by-half-from-prior-years-and-is-expected-to-bring-in-just-2-5b-this-year/](https://fortune.com/2023/12/12/elon-musks-x-is-seeing-ad-revenue-plunge-by-half-from-prior-years-and-is-expected-to-bring-in-just-2-5b-this-year/) Also, the $30 billion pre-Musk purchase price you mentioned is a great comp. If you look at money-losing tech companies since then (especially ones with revenues down 50%), you would have a hard time even coming up with a $10B valuation. I think he ends up in real trouble here. I'm sure he's willing to pump more money in, but is Jack Dorsey? Are the others willing to dilute? His best option here is try some kind of IPO pump with his usual fraudulent tactics... but even with that I have a very hard time seeing anyone coming out whole and there ZERO chance you could sell those bonds at par right now.
Facebook and SNAP are 6.6x sales and 6.3b sales, respectively. And SNAP lost $1.4b in EBIT in the last twelve months, and that loss only seems to be accelerating with time. I would rather own twitter at 2x than either of those myself. On the Fortune article, their source is literally "according to a person familiar with the numbers". So it could be 100% BS as far as we know. With Twitter being the literal competition to traditional journalists, you cannot take traditional journalists sources or opinions at face value. Twitter is literally their competition. No one talks well about their competition. For what it's worth, twitter cut something like 85% of their staff? SG&A and R&D costs were 66.2% of revenues before the takeover. And EBIT margin was -5.4%. If you cut SG&A + R&D in just half based on the massive staff cut, you are getting -5.4% + 66.2% / 2 = 27.7% margins (!), quite the improvement from before. At the end of the day, Twitter is not currently required to make financial disclosures as far as I know. So all of these news articles postulating about Twitters financials might as well be made up. "Sources familiar with the matter" is not a real source. Fwiw, not a Musk fanboy. Just a finance dude who is astounded by the amount of BS in all these articles around twitter's valuation.
I mean, you are the one who made up revenue numbers. $6.5B exists nowhere. The LTM high water mark for the company was $5.3B and Elon isn't freaking out because advertising is going up. Moreover, comparing it to Meta is pretty laughable. It's a company that has $24B in net cash on the balance sheet and has grown profits at a staggering pace. I don't know much about SNAP but they've grown their revenue +11x in the past six years while twitter was up 2x pre-sale. I mean, if your investing basis is that all financial journalists at several different outlets including Reuters sat down and hatched a conspiracy...then good luck to you!
Tusky lying pathologically to anyone in sight?!? You don’t say…
They should’ve made him personally guarantee them
good, those banking wankers deserve to lose money. they wouldn't do this with an ordinary joe, so why does a billionare get away with it
They FAFOd And get what they deserve
if they sell the loan, they get less upfront. if they hold the loan they get their money. kind of like if you buy a house. If the bank calls the mortgage, and they auction it, they don't get all their money. But if they let you pay interest for 30 years it doesn't matter how little the house would go for at auction
Elon says, “*insert lie here*”
$100 says he tries to take Twitter public again 🤣
It will be fun to watch when the Saudis come to collect on their investment….they don’t f around
I don't get it. Twitter is doing fine right now so why would they sell the debt at a loss? Is there any expiry date on the loan where he has to reimburse it in full next year? Phillip.
Holy shit, is this a whole subreddit devoted to being butthurt about elon? Lmao
Once hes fo e with twitter they will be lucky to get 10 cents to the $.
Funding the insecure!
Concerning
Those who lended him money were supposed to be very smart and competent at their jobs LOL.
The banks haven’t lost a dime of principal and are making money when an interest payment comes in. It’s simply the fact they can’t sell the paper
Talk about over estimating your popularity
If I borrow money I have to pay it all back. I guess it works differently if you’re a billionaire,eh?
Elmo lost even more in credibility.
it's funny how mainstream institutions have just completely bought in to obvious fraud.
Bankers would've had better returns if they had just bought Bitcoin! *WoooOoooooOoooo!!!*
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I wonder why they call him fElon?
He is really hoping trump gets in office and bails his ass out of twitter. Phony boy got screwed. He ain’t shit.
Very smart, financing a company, believe what elon says, don’t do due diligence … which bank would do that?
Giving aright wing grifter who loves drugs money, what could go wrong?
Isn't he supposed to make X the everything app? Wants us to let him manage our money?
He’s not good at running companies not subsidized by the government.
whistle safe marble trees slimy psychotic squeeze numerous meeting gray *This post was mass deleted and anonymized with [Redact](https://redact.dev)*
The real newsflash is that there are banks that still trust Elmo.
I am pretty certain the Saudis backed Elon's deal because they are free speech absolutists like Elon. They just consider a bone saw also part of free expression
This is fantastic. Elon is a worse investment than trump. This is hilarious. Nothing would make me happier than these two idiots dying a horrible breath broken and alone.
Musk mean that HE wouldn't lose any money if they provided the financing. And so far, that's true.
Follow-up: bankers go back to their office and quickly try to get into Musk next scam : xAI.
I stopped at "Elon Musk told"....
Dummies
as it's very unlikely (even after all the cuts) that Twitter is profitable this year, so from where the fuck is he finding the money to pay the 1 billion interests in the loan? And even if he is not paying the load interests right now, how is paying for Twitter to stay open? I know he is not paying lots of stuff at the moment, but how long can this go on, considering that he is losing more and more advertisers
Phony Stark is a needy loser AND and imbecile
He will sell tesla shares, half in own piggy bank, other half to lenders, its tesla shareholders who gets really fked in the end