Musk is a businessman and he played the move smartly and organized several financiers to support this whole project. We are talking about Musk’s rich friends, but also holding companies from the Middle East, as well as well-known people in the crypto world.
As much as the events of the past week seem like a single-minded pursuit of a man to make Twitter profitable, it is very likely that Musk feels pressure to satisfy the appetites of all those who have invested, and it is assumed that we are talking about more than 20 different companies, banks, and at least one Saudi prince, reports Gizmodo.
Since the mass layoffs began, a large number of advertisers have stopped advertising on Twitter because they are unsure of the direction the platform will take. Some of the advertisers that have paused their ads include Toyota, Mondalez, General Motors, the VW Group, and many others.
Given that Twitter is now run by Elon Musk, who is good at his job but has a large number of investors whose opinions he must respect, it’s no surprise that advertisers are skeptical, to say the least. However, pausing advertising also means a serious shortfall in revenue for a company struggling to stay profitable.
Advertising as the key to Twitter’s financial stability?
Despite the hopes that things will change significantly, it should be noted that the whole process of buying Twitter has already seriously shaken the value of the company, so the initially agreed price of up to .2 per share is much higher than the real price of the stock at the time of purchase. Also, it should be mentioned that many investors before the purchase were happy because they thought that the deal to buy a company that is worth 10 to 12 billion dollars for 44 billion dollars, failed. This is not a surprise if we consider that, for example, the company MVP (Manhattan Venture Partners) invested 7.1 billion dollars in Musk’s purchase of Twitter.
With some advertisers looking to cut ties with Twitter, the platform could be in serious financial trouble. Musk himself noted that Twitter had a “big drop in ad revenue” and blamed “activists” for the pressure they put on advertisers to leave the platform.
We should also not forget the fact that Musk took on the billion in debt that Twitter had at that time and that it will pay interest for years. Bloomberg reported that Musk will have to pay $1 billion on that debt every year for the next few years.
In addition to loans and equity investments, most of the cost was borne by Musk himself, who invested 25 of the 44 billion dollars in this purchase. However, perhaps the biggest problem in the whole story is the fact that even to this day we do not know who the other investors are and what their wishes and plans are.
To secure $25 billion, Musk sold Tesla shares and pledged part of the shares so he could get loans from banks. Nevertheless, despite this, Musk remains the richest person in the world with a net worth of just under $200 billion, but he still experienced a decline.
Certainly, it will be interesting to see if the current troubles at Twitter affect Musk’s fortunes…