Elon Musk May Have To Sell More Tesla Stock To Keep Twitter Alive
A new report by Fortune paints a pretty grim picture for Elon Musk and his involvement in Twitter. Thing look pretty dire at Twitter. How dire you ask? How about this:
Musk’s repeated outbursts against advertisers have dried up the main source of revenue for the loss-making company formerly known as Twitter. A recent decision to sue them for heeding his own advice to not buy ads on the platform hasn’t helped. At some point, he will have to provide a fresh infusion of cash to salvage his $44 billion takeover. And that might mean Musk sells Tesla stock to raise the money—hurting anyone who holds the carmaker’s shares.
“I would be expecting something between $1 and $2 billion in stock,” said Bradford Ferguson, president and chief investment officer of asset manager Halter Ferguson Financial, in comments posted to YouTube on Wednesday. This alone could cause the stock to lose between 5% and 10% of its value. “It’s a massive hole they need to plug.”
If you’re a Tesla shareholder, that has to freak you out. After all, Elon has sold Tesla stock at least two times before to finance his shenanigans at Twitter. Here’s the specifics as to why he needs that money:
Ferguson based his assessment on internal second-quarter figures recently obtained by the New York Times. According to this report, X booked $114 million worth of revenue in the U.S., its largest market by far. This represented a 25% drop over the preceding three months and a 53% drop over the year-ago period.
That already sounds bad. But it gets worse. The last publicly available figures prior to Musk’s acquisition, from Q2 of 2022, had revenue at $661 million. After you account for inflation, revenue has actually collapsed by 84%, in today’s dollars.
No one knows how much longer X can survive, since the company doesn’t release financial results. But in November, Musk himself admitted X could face bankruptcy due to the advertiser boycott
So for a guy who loves to pay the game of FAAFO, it’s pretty clear that he’s in the “find out” phase of that. And what’s bad about this is that he’s completely willing to take Tesla, his shareholders and who knows what else down with him.
And I thought that Elon was supposed to be smart.
August 21, 2024 at 9:43 am
[…] already, the banks will want Elon to restructure this debt so that the banks lose less money. That ties into the fact that he might have to sell more Tesla stock to keep the banks happy. It will be interesting for those who watch the dumpster fire that is Twitter and the dumpster fire […]
August 25, 2024 at 8:24 am
[…] bills alone must be insanely expensive. And factoring in the fact that Twitter is bleeding cash and Elon is likely going to sell Tesla stock to finance Twitter, this seems like a #fail from a strategy perspective. But Elon isn’t known for being smart. […]