Elon Musk Is Looking to Raise Money to Fund Future Twitter Projects and Also Reduce $25 Billion in Debt.
Elon Musk hopes to close this fundraiser for Twitter by the end of 2022.
Should we expect any changes in Twitter's capital in the short term? Two months after buying the social network for 44 billion dollars, Elon Musk is looking to raise funds from investors, reported the American media Semafor in recent hours.
Several investors have been contacted by Jared Birchall, the CEO of the family office that manages the fortune of Elon Musk.
According to Semafor, Elon Musk could issue new Twitter shares and sell them for $54.20 per share - exactly the price the billionaire paid when he bought the platform in late October 2022. According to the pitch document, the fundraising should happen “before the end of the year.”
Elon Musk's team reportedly launched the project after receiving “numerous” expressions of interest.
Among the targets approached are, for example, Ross Gerber, the CEO of the investment bank Gerber Kawasaki ($1.7 billion in assets under management). The investor had already bet $1 million when Elon Musk bought Twitter. According to Semafor, Ross Gerber has not ruled out participating in a new round of financing, depending on the plan presented by Elon Musk.
Massive loss of revenue
This fundraising comes after major operational changes at Twitter. Since he arrived at the helm, Elon Musk has fired the management team, laid off half of the workforce worldwide, and relaunched the paid formula Twitter Blue. On the content front, the Tesla boss has also set himself up as moderator-in-chief, with arbitrary decisions, far from the moderation standards generally applied by social networks.
A few days ago, his decision to arbitrarily block a dozen journalists, whom he accused of endangering his family, provoked an outcry from the UN to the European Union, until they were allowed again.
https://ssaurel.medium.com/for-elon-musk-free-speech-ends-where-his-interests-begin-he-just-banned-journalists-from-twitter-5ea33e16a7b8
However, these changes have scared off advertisers who fund Twitter up to 90% via digital advertising. In recent weeks, Elon Musk himself had recognized that the platform was recording “a massive loss of revenue,” while it was already fragile before the purchase by the billionaire.
In this context, Elon Musk needs new money to finance his future projects for Twitter. But this fundraising must also help him reduce his debt and pay interest. To buy Twitter, the businessman had to take on a debt of 25.5 billion dollars - half of which was in Tesla shares as collateral.
In the meantime, the rise in interest rates and the flight of advertisers have created additional financial pressure, forcing Elon Musk to sell some of his Tesla shares. Since the beginning of 2022, Elon Musk has sold $40 billion worth of Tesla stock - including $3.6 billion again this week.
It now remains to be seen which investors will participate in the round. Elon Musk has admitted to having “overpaid Twitter,” but he is now offering them to invest at the same price as him ... The flight of advertisers does not help either. However, Elon Musk can count on the support of the big tech bosses in Silicon Valley, from Mark Zuckerberg (Meta) to Reed Hastings (Netflix). Larry Ellison, the boss of Oracle software, had brought him 1 billion when he bought Twitter.
Some reading
The Authoritarian Drift of Elon Musk on Twitter Worries Both America and Europe. At the rate things are going, it’s not clear that Elon Musk will have time to implement his Twitter 2.0 vision.
Obsessed With Twitter, and Acting as an All-powerful Super Moderator, Elon Musk Is Undermining Tesla. The stock market value of Tesla has collapsed and the image of Elon Musk’s automotive group has deteriorated under the effect of the multiple polemics that it keeps triggering.
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Will Elon Musk Win His Free Speech Bet With Twitter? For These Experts, the Answer Is NO. They see Twitter losing several tens of millions of users in 2023 and 2023.
Inflation Was the Theme of 2022 in the Investing World — For 2023, Two Themes Will Dominate. Here They Are. Inflation at 7.1% in America for November 2022 announced by the US Bureau of Labor Statistics confirms this.