TECH NEWS – The owner of Twitter has come out with his usual denial card, but we have to ask: is the site really worth buying?
In 2022, Twitter was bought by the owner of Tesla and SpaceX for $44 billion. Now, it’s been reported in the Wall Street Journal that some of the banks that helped buy Twitter are getting antsy about their investment (it’s about $13 billion). Bank of America, Barclays, and Morgan Stanley are hoping for a more positive financial outlook, so they are holding debt in the hope that they can sell senior debt at 90-95 cents on the dollar while holding junior stock.
Next week they are likely to test the waters with a $3 billion debt package, which will follow the sale of $1 billion of debt to private investors. The problem for the banks is that they think Musk paid too much for Twitter, and they think this is so serious because the company is underperforming after the acquisition. Musk still has an ace in the hole: he is essentially the right-hand man of Donald Trump, the president of the United States, and that could bode well for the future of the site.
This is optimistic. The interest alone on the Musk deal is worth $1 billion a year, while new additions like job ads and a video tab on the site are unlikely to make a dramatic difference to the bottom line. Musk once said he wanted to make Twitter an all-in-one app, but that seems like a pipe dream at this point. The WSJ also published an internal email from Musk, and The Verge saw it. This is a bit of a departure from the positive tone of his public statements about the deal. In it, Musk wrote that their user numbers are stagnant, their revenues are unimpressive, and they are barely profitable.
This report is false. I sent no such email.
WSJ is lying.
— Elon Musk (@elonmusk) January 25, 2025
The WSJ added that banks are hoping to use Musk’s narrative of his relationship with Trump to recoup their losses, as some unnamed investors may be interested in buying based on the belief that his financials are trending upward. But Musk refuted the claim a few hours later. The question is how many investors will rush to buy the debt. Despite the exodus of advertisers and the various controversies surrounding Musk’s persona, the company’s finances appear to be improving, but when it comes to ad revenue, Twitter is not even in the woods compared to Facebook, for example.
Is Musk a coward to admit when something is not going as it should? How familiar.
Source: PCGamer, Wall Street Journal, The Verge
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