Maybe it's a megalomaniac dictator thing, and I will never understand.
Think about FTX, cryptocurrencies, Juicero... it's becoming pretty overwhelmingly clear that having money is not in any way correlated to being able to spend it intelligently. It's time to start seriously thinking about wealth caps.
Why? What advantage would that bring to him?
Honest question. With him overpaying for Twitter already (maybe not completely voluntary), bankruptcy looks like the fastest way to make the deal even worse.
It doesn't take a financial wizard to realize that Twitter was insolvent from the day it was purchased. Saddling a company with an interest payment that's nearly double revenue is a clear indication to me that the time period from purchase-to-bankruptcy was going to be measured in months. So we can be pretty confident that everyone involved with this purchase was expecting Twitter to die quickly.
You and I are on the same page. But the "why" is not "why would they make such a poor financial choice," since it's clear the answer to that is "to kill Twitter." The why is really, "why bother killing Twitter?" I get Musk's reasoning, but I don't understand what his co-investors get out of the deal. Authoritarian regimes benefit from having dissidents operate on a centralized platform, because it's easier to monitor. Killing twitter pushes these groups out to platforms that are going to be decentralized and impossible to block. It's weakening their grip, not reinforcing it.
My best guess is that they assumed that Musk would stay on post bankruptcy and act as their pro-authoritarian sock puppet. But they didn't anticipate his complete ineptitude would drive users off the platform in such numbers.
Why would you say that?
He signed a binding agreement to buy Twitter at an agreed upon price.
Nobody forced him to sign that, ergo: he completely voluntarily signed a binding agreement on which he later wanted to renege.
This is not to defend Musk in any way, it's just a statement of facts.
It could get ugly indeed. Tesla's brand image is slipping, and everything points to that just getting worse. Between Elon as the face of the company, and their seeming inability to deliver a competitive product now that everyone else has started making EVs... well, I wouldn't buy any TSLA for sure. You buy a Tesla now for the supercharger network, everything else is a compromise. That's a shaky place to be.
Musk put up $22.4B of his own money to buy Twitter, plus another $4B he already had invested.
Maybe Twitter was worthless when Musk bought it, and that $26.4B was - theoretically - already burnt in the deal. If you pay $26.4B to buy garbage, you lost $26.4B from the start...
Assuming Twitter is not worthless, Musk loses whatever percentage of that $26.4B actually has value. Worst case, that's probably at least 20% - which is still $5.28B.
He'll also still be on the hook for $13B in personal debt financing to banks. Unless Musk himself can claim to be bankrupt, he owes them $13B - and they're going to get it one way or the other.
Further, another $7B of equity investments came from questionable investors like Saudi Prince Alwaleed bin Talal. Who knows what they're going to do if Musk purposefully runs the company into the ground and burns billions of their money...
There's a lot of reasons why Musk can't just say oops, claim bankruptcy and leave everyone else holding the bag.
It's almost as if all the other investors aren't morons...
The bond market has shifted. Twitter still owes $13 Billion of course, but those bonds are toxic. No one wants junk-bonds from Twitter right now.
Advertisers have come back and the staff is muuuuch smaller than before.
The only logical reason I can think of to not pay something you know you’re legally obligated to pay is if you’re intending to declare bankruptcy to avoid paying. Otherwise you’re going to end up paying and pay a load of legal fees on top.
I guess one alternative is effectively taking a risky loan: you are running low on cash but you have a large cash flow coming in the future. Stop paying rent, eventually after a protracted court battle pay your debts with that future cash flow and the legal fees are “interest”.
Neither feels like the actions of a financially healthy company.
Other examples:
- Illegal firings of non-US Twitter staff
- Pushing back the Twitter acquisition
- Roadster/Truck deposits
- Radar will-they/won't-they
The ability to stop paying bills without seeing the inside of a cell or having to sleep in the cold is a powerful negotiation tool. Some won't even have the means to sue him. Despite being painted as failures, none of these will have a materially adverse affect on his life. Consequences are different for a person like him.
And other lawsuits will be coming in soon now that they got rid of their content moderation staff.
The idea is usually to slash close enough to the bone that the company survives, but 100% of profits go to debt servicing. But this doesn't make for a company that's resilient to economic turmoil (or one that can invest money into growth). So the contingency plan is to ensure that they are first in line in court.
Big names not sure about spend
Which advertisers, for what price?
We will never know the true revenue of Twitter because it is no longer a traded company nor are they in any obligation to publish data of this kind publicly.