I dunno. He may not lose his fanbase, but there is a line where many advertisers will leave, which will make the remaining advertisers antsy and more prone to leave.
A low single digit billion exit is meaningless for Elon. It things reach that point it'll make more sense for him to just ride it out till the end and file for bankruptcy.
Even if you bought Twitter for $0, you're taking on $13 Billion in loans.
You'd have to buy Twitter for *negative* dollars, like -$8 Billion (ie: Elon gives $8 Billion to you and Twitter) to "only" buy the company for $5 Billion effective costs.
Note: The $13 Billion loan is likely devalued 30%+, so maybe its only worth $9.5 Billion these days. Hard to say exactly, I'm just making some crude assumptions here. The loans may have been backed by several banks, but they aren't trading on the public market yet so its hard to value them.
> An alternative is that it gets purchased for a few billion dollars by a tech PE firm or Microsoft, which honestly would be a pretty good outcome.
But with all the potential outstanding liability? Why not wait until the hammer comes down and the uncertainty is gone to purchase the firm, or whatever assets are useful, unless you really want to beat someone else to the punch?
I know you know this, but I'm going to elaborate for others.
Bankruptcy is the best time to buy companies. The loans will be rewritten, so you can buy the company's assets _WITHOUT_ taking on any of its liabilities. The Twitter name, trademark, and other assets (maybe source code, servers, data-centers, etc. etc.) all will be up for sale. You can likely buy the "bits of Twitter" you care most about, and leave the other bits for others.
I have severe doubts that anyone will want to buy Twitter when it has so much debt under its name. Might as well wait for it to collapse first.
Under US bankruptcy laws corporations can file for bankruptcy for the purpose of reorganization of debts (chapter 11) or for liquidation (chapter 7).
Under reorganization the expectation is that you are trying to rehabilitate a failing business that may be profitable again - so the business continues running, and can even borrow money - though your business actions are monitored and ultimately may be approved by the court.
Under liquidation, you auction off everything that isn’t bolted down (and some things that are).
You usually restructure businesses that could emerge from bankruptcy and be profitable again, and liquidate those that can’t. Which one Twitter may be can be debated.
So in this case, would Elon have to file for bankruptcy and then sell it to someone else to restructure it? If so, what happens with the cash, since I assume the debt-holders have been wiped out?
To restructure he wouldn’t necessarily need to sell: basically, Twitter would put out a restructuring plan that shows how they’re going to fairly pay creditors and bring the business back to profitability. Sometimes that means reducing operations and selling off parts of your business. It often means creditors taking a haircut - because 25% or 50% beats 0%. This often comes in equity in the restructured company in exchange for creditors waiving their claims.
Here’s the rub, though: in chapter 11, the courts have a huge role. They approve your restructuring plan only if it’s fair to your creditors. They have to green light quite a few actions you might want to take in the course of running your business. They might form a creditors committee out of the people you owe money to and take their advice on decisions. It’s a long and drawn out process that requires calm leadership willing to work with ones “adversaries” to come to an agreement.
And no matter your opinion on Elon, positive or negative, I doubt many people would say his reign at Twitter suggests he’d do that.
it seems to be working just fine despite all the layoffs.
many of these complaints seem more political than practical. I understand that a set of people exists who are dissatisfied with twitter and/or are eagerly anticipating some grand implosion of the company, but many more people than this set use the platform, so questions like "how much longer can twitter last, really?" come across as having come from a very insulated ideological bubble, rather than taking the entire spectrum of experiences had by twitter users into account.
There have been constant problems since Musk took over. Just yesterday retweets were showing up in people's feeds without the attribution of who retweeted them, so they looked like random people showing up in your feed.
The layoffs are certainly one piece of the puzzle, but the incompetent leadership style of Musk, complete lack of viable strategy and failing financials are also to blame.
Political complaints are practical. The entire thing and every decision is in the hands of someone who has proven himself petty, vindictive, and capricious. Flawed as it was there was at least a process before.
What his failed "twitter files" scandal did reveal was that it was previously run by people who may have been in some ways wrong or incompetent, but at least were generally operating with a sense of professional responsibility. Musk actively flouts professional responsibility & ethics, which is strictly worse with a large scale international social media platform.
A meta comment: since Elon’s takeover there has been an astounding volume of Twitter doom wishcasting.
Almost none of these predictions have come true, and while I suppose they may eventually, the posts/articles getting increasingly difficult to pay attention to.
Every time I see another of these my reaction is “god, another one?” I’ve been struggling to evaluate these articles on the merits, I’m sure I’m not alone.
If you want to write an article like this and avoid this problem I recommend that you take extreme care to at least pretend Elon failing wouldn’t give you profound schadenfreude.
There's only one prediction that really matters in my eyes: the prediction that Elon would win the October 2022 court case and somehow get out of his contractual agreement to buy Twitter.
Can the future be predicted? Ehh, probably not. But the thing that has held up time-and-time again is legal, contractual obligations.
1. Elon Musk is terrible at understanding contracts.
2. Because of #1, Elon Musk breaks contracts on a regular basis.
3. In some cases, Elon Musk gets sued, it takes months (or even a year+) for the courts to address these contracts, and Elon eventually gets his ass kicked in court.
#3 has the most uncertainty. But... Elon has been breaking contracts with such vigor this past year (including his attempts to "not buy Twitter", among others), that I'm willing to bet that he's going to make the same mistake again, and again, and again.
----------
Haraldur Thorliefsson and the FTC case are both similar events to the October 2022 court case in my eyes. They seem to have solid foundation of law. They seem to have been ignored by Elon Musk, and finally, there seems to be court action going on.
I don't know how long the court action will take, but I'm willing to bet against Elon Musk on this one.
Were you around here for the last year? That bots and mDAU numbers are so awful that Elon Musk would obviously win the court case? TWTR stock price was $35 or less (despite Elon Musk's court-ordered offer of $54 per share).
Then, there was a prediction of "If forced, where would Elon Musk's money come from??". And I think everyone knows that Elon's #1 source of money is TSLA shares. Lo-and-behold, TSLA drops dramatically as Elon sells $10s of Billions to fund the Twitter deal.
This was probably some of the easiest money you could have made last year in the stock market. Short TSLA in 2022 (since Elon needs a source of funding) and long TWTR (because Elon would lose the court case).
----------
Now we have other, court-based predictions going on in this blog post. I'm not sure if there's much to trade on (maybe short Tesla? If Musk has to tap into TSLA shares to pay for these issues??)
To be fair to the doomers- slow failures can look like “business as usual” for a long long time. It’s very dependent on how someone defines success and failure. If Elon pours a billion a year into Twitter, is that a failure? Alternatively, is it really a success if it just keeps chugging along but doesn’t grow or innovate?
Maybe Twitters ends up something like IBM. It’s still there, but people can differ on whether IbM of the last 20+ years is really successful.
Edit - this is why most “predictions” are dumb, they are not concrete, measurable, or time bounded.
Elon/Twitter stories get clicks in part because of the "how's he going to get out of this one!?" factor. As the article points out, Twitter's financial numbers and upcoming liabilities don't look good. This is not subjective; Twitter is in bad fiscal shape. In some ways Elon walked the same knife's edge with Tesla and SpaceX (he himself admits how touch-and-go it was at various points), but he managed to pull it off.
Now he's doing a similar stunt with Twitter, but with a much bigger and more attentive audience. And a far cockier attitude.
And everyone's wondering how long he can play corporate Evel Knievel before his luck runs out.
I thought it was quite well-understood that Musk has a long-term plan to turn Twitter into "the WeChat of the West", a centralized identity/payment platform, likely in the form of x.com?
Sure, and he also has long-term plans to build a Tesla autonomous android, and a SpaceX Mars colony. I wish him the best of luck, but I'm not going to put money on any of those plans succeeding any time soon.
of those three things, turning Twitter into WeChat seems by far the most plausible, achievable, marketable, sustainable, and profitable—so, what point are you trying to make here?
The way he's been running Twitter, at this point a Mars colony does seem more likely. It hasn't just been erratic but actively buffoonish. The "plan" seems to be whatever whim he has day-to-day, made infinitely worse by his seemingly 24/7 capering on Twitter himself.
>More than 70 of Twitter’s top 100 advertisers from before Mr. Musk’s takeover weren’t spending on the platform as of the week ended Feb. 25, according to an analysis from research firm Pathmatics, which is part of Sensor Tower.
"I don't like Elon Musk and it frustrates me that he managed to purchase Twitter even though everyone in my bubble told me it wouldn't happen and/or that the process of doing so would bankrupt him, and neither of those things ended up happening"
optionally, additionally: "also I liked Twitter better when only celebrities and friends of people who worked at Twitter could be Verified, because I was one of those friends, and I was Verified just like the celebrities, but the unwashed masses weren't, and that made me feel important and good about myself, and now that said unwashed masses can pay a nominal fee to become Verified, and Twitter is phasing out the older, unpaid Verified accounts, I'm going to take my ball and leave, because feeling more important than most people was a chief reason for me to use the platform to begin with. now come join me in moving over to $NEW_SOCIAL_FEED_APP and follow me there—where, you'll notice, my profile once again has an exclusive Verified badge of some sort, setting me apart from you, the unwashed masses."
I don't like elon musk and I do think it is bad that a rich person can buy an entire platform widely used for public discussion because they don't like how it's being used.
You're having fun mocking it but I don't think there's anything particularly inconsistent or outrageous about this position. Musk is annoying and hangs out with shitty annoying people, now shitty annoying people are more prevalent on twitter. The changes he's made to timeline, presentation, letting the white nationalists back on make it actively worse for me, in ways it wasn't before. None of these are preposterous preferences my man.
Do you think that's a useful insight here? My beef isn't with the nature of ownership, it's with the specific dynamics of this ownership. One single person is different from a group, and it being this specific individual is also highly relevant.
> None of these are preposterous preferences my man.
sure, but at some point you have to separate your preferences from your objective analysis of whether or not something is going to fail, if you're conducting yourself in a manner that demands any amount of respect at all. it's very childish and naïve to "predict" that something you don't like (anymore) "will fail", and scramble to come up with as many disparate reasons as to why this is surely, definitively the case, all ex post facto, just because you don't like it. there's plenty of things that I don't like in the world that show no signs of failure or implosion or whatever anywhere on the horizon—why would I "predict" their "failure", just because I don't like them?
if this article (and others like it) was titled something like "Here's Why Twitter Should Fail: Ten Reasons I Don't Like It Or Elon Musk Very Much At All And Wish Both Of Them Would Just Go Away Forever", then, well, that would be a bit more honest, wouldn't it?
Nah the reason I want twitter to die is I hate twitter and I think it has been a blight upon mankind. It is a bad platform for everything expect announcements/being a pseudo RSS feed yet people insist on using it for discourse and it's fucking stupid.
I also don't like Musk but I wanted twitter to die for years before he had anything to do with it. I'm just excited and hopeful that he may eventually kill it
The world's formerly richest man has successfully flushed 25 Billion -- with a B -- dollars in value down the toilet in a mere six months. That's like real money even for the lifestyles of the rich and shameless set.
I think a lot of people are sitting around with a bag of popcorn watching this debacle in hopes that just for once some rich jerk fails so hard, his money and powerful connections can't fix it, can't save face, can't let him fail upwards as usual.
I think it's like a weirdo fantasy that maybe the rich and powerful will all learn their lesson by proxy if this goes up in flames bad enough.
And failing that, it's schadenfreude for all the not billionaires who are just sick to death of money insulating the rich from the consequences of their actions which all too often seem to hurt anyone and everyone but them.
Twitter will last as long as Elon wants it to, the spend is pretty much know. And it’s a software problem. Sure if they make zero money it’s fail eventually but don’t bet on that
Twitter faces two major financial threats: pending employment lawsuits and massive fines from regulatory violations.
On top of this, the platform's recent efforts to limit API usage have negatively affected both regular users and SaaS products that rely on Twitter analytics. With these mounting challenges, the company's survival is increasingly uncertain, and some are predicting bankruptcy as a potential outcome. The long-term impact of these developments remains to be seen.
64 comments
[ 4.8 ms ] story [ 108 ms ] threadPeople like it when rich people say stupid things on the internet. Its how he grows his fanbase.
And this is not unprecedented. See: Kanye West.
You'd have to buy Twitter for *negative* dollars, like -$8 Billion (ie: Elon gives $8 Billion to you and Twitter) to "only" buy the company for $5 Billion effective costs.
Note: The $13 Billion loan is likely devalued 30%+, so maybe its only worth $9.5 Billion these days. Hard to say exactly, I'm just making some crude assumptions here. The loans may have been backed by several banks, but they aren't trading on the public market yet so its hard to value them.
But with all the potential outstanding liability? Why not wait until the hammer comes down and the uncertainty is gone to purchase the firm, or whatever assets are useful, unless you really want to beat someone else to the punch?
Bankruptcy is the best time to buy companies. The loans will be rewritten, so you can buy the company's assets _WITHOUT_ taking on any of its liabilities. The Twitter name, trademark, and other assets (maybe source code, servers, data-centers, etc. etc.) all will be up for sale. You can likely buy the "bits of Twitter" you care most about, and leave the other bits for others.
I have severe doubts that anyone will want to buy Twitter when it has so much debt under its name. Might as well wait for it to collapse first.
Under US bankruptcy laws corporations can file for bankruptcy for the purpose of reorganization of debts (chapter 11) or for liquidation (chapter 7).
Under reorganization the expectation is that you are trying to rehabilitate a failing business that may be profitable again - so the business continues running, and can even borrow money - though your business actions are monitored and ultimately may be approved by the court.
Under liquidation, you auction off everything that isn’t bolted down (and some things that are).
You usually restructure businesses that could emerge from bankruptcy and be profitable again, and liquidate those that can’t. Which one Twitter may be can be debated.
Here’s the rub, though: in chapter 11, the courts have a huge role. They approve your restructuring plan only if it’s fair to your creditors. They have to green light quite a few actions you might want to take in the course of running your business. They might form a creditors committee out of the people you owe money to and take their advice on decisions. It’s a long and drawn out process that requires calm leadership willing to work with ones “adversaries” to come to an agreement.
And no matter your opinion on Elon, positive or negative, I doubt many people would say his reign at Twitter suggests he’d do that.
https://archive.md/8DeJ7
many of these complaints seem more political than practical. I understand that a set of people exists who are dissatisfied with twitter and/or are eagerly anticipating some grand implosion of the company, but many more people than this set use the platform, so questions like "how much longer can twitter last, really?" come across as having come from a very insulated ideological bubble, rather than taking the entire spectrum of experiences had by twitter users into account.
What his failed "twitter files" scandal did reveal was that it was previously run by people who may have been in some ways wrong or incompetent, but at least were generally operating with a sense of professional responsibility. Musk actively flouts professional responsibility & ethics, which is strictly worse with a large scale international social media platform.
Almost none of these predictions have come true, and while I suppose they may eventually, the posts/articles getting increasingly difficult to pay attention to.
Every time I see another of these my reaction is “god, another one?” I’ve been struggling to evaluate these articles on the merits, I’m sure I’m not alone.
If you want to write an article like this and avoid this problem I recommend that you take extreme care to at least pretend Elon failing wouldn’t give you profound schadenfreude.
There's only one prediction that really matters in my eyes: the prediction that Elon would win the October 2022 court case and somehow get out of his contractual agreement to buy Twitter.
Can the future be predicted? Ehh, probably not. But the thing that has held up time-and-time again is legal, contractual obligations.
1. Elon Musk is terrible at understanding contracts.
2. Because of #1, Elon Musk breaks contracts on a regular basis.
3. In some cases, Elon Musk gets sued, it takes months (or even a year+) for the courts to address these contracts, and Elon eventually gets his ass kicked in court.
#3 has the most uncertainty. But... Elon has been breaking contracts with such vigor this past year (including his attempts to "not buy Twitter", among others), that I'm willing to bet that he's going to make the same mistake again, and again, and again.
----------
Haraldur Thorliefsson and the FTC case are both similar events to the October 2022 court case in my eyes. They seem to have solid foundation of law. They seem to have been ignored by Elon Musk, and finally, there seems to be court action going on.
I don't know how long the court action will take, but I'm willing to bet against Elon Musk on this one.
Then, there was a prediction of "If forced, where would Elon Musk's money come from??". And I think everyone knows that Elon's #1 source of money is TSLA shares. Lo-and-behold, TSLA drops dramatically as Elon sells $10s of Billions to fund the Twitter deal.
This was probably some of the easiest money you could have made last year in the stock market. Short TSLA in 2022 (since Elon needs a source of funding) and long TWTR (because Elon would lose the court case).
----------
Now we have other, court-based predictions going on in this blog post. I'm not sure if there's much to trade on (maybe short Tesla? If Musk has to tap into TSLA shares to pay for these issues??)
Maybe Twitters ends up something like IBM. It’s still there, but people can differ on whether IbM of the last 20+ years is really successful.
Edit - this is why most “predictions” are dumb, they are not concrete, measurable, or time bounded.
Now he's doing a similar stunt with Twitter, but with a much bigger and more attentive audience. And a far cockier attitude.
And everyone's wondering how long he can play corporate Evel Knievel before his luck runs out.
But it sure as hell won't be with a company owned by Elon Musk.
Google is the closest we've seen to it, and a lot of tech people would certainly reject Google trying to be WeChat.
>More than 70 of Twitter’s top 100 advertisers from before Mr. Musk’s takeover weren’t spending on the platform as of the week ended Feb. 25, according to an analysis from research firm Pathmatics, which is part of Sensor Tower.
-- WSJ, 3/3/2023
https://archive.ph/Uoge3#selection-483.0-483.228
optionally, additionally: "also I liked Twitter better when only celebrities and friends of people who worked at Twitter could be Verified, because I was one of those friends, and I was Verified just like the celebrities, but the unwashed masses weren't, and that made me feel important and good about myself, and now that said unwashed masses can pay a nominal fee to become Verified, and Twitter is phasing out the older, unpaid Verified accounts, I'm going to take my ball and leave, because feeling more important than most people was a chief reason for me to use the platform to begin with. now come join me in moving over to $NEW_SOCIAL_FEED_APP and follow me there—where, you'll notice, my profile once again has an exclusive Verified badge of some sort, setting me apart from you, the unwashed masses."
You're having fun mocking it but I don't think there's anything particularly inconsistent or outrageous about this position. Musk is annoying and hangs out with shitty annoying people, now shitty annoying people are more prevalent on twitter. The changes he's made to timeline, presentation, letting the white nationalists back on make it actively worse for me, in ways it wasn't before. None of these are preposterous preferences my man.
sure, but at some point you have to separate your preferences from your objective analysis of whether or not something is going to fail, if you're conducting yourself in a manner that demands any amount of respect at all. it's very childish and naïve to "predict" that something you don't like (anymore) "will fail", and scramble to come up with as many disparate reasons as to why this is surely, definitively the case, all ex post facto, just because you don't like it. there's plenty of things that I don't like in the world that show no signs of failure or implosion or whatever anywhere on the horizon—why would I "predict" their "failure", just because I don't like them?
if this article (and others like it) was titled something like "Here's Why Twitter Should Fail: Ten Reasons I Don't Like It Or Elon Musk Very Much At All And Wish Both Of Them Would Just Go Away Forever", then, well, that would be a bit more honest, wouldn't it?
I also don't like Musk but I wanted twitter to die for years before he had anything to do with it. I'm just excited and hopeful that he may eventually kill it
Succinctly: I want Twitter to fail because Elon Musk violates contracts.
A little more: If he gets away with it, more companies will fire employees without paying severance. Toilet paper is also a perk worth preserving.
I think a lot of people are sitting around with a bag of popcorn watching this debacle in hopes that just for once some rich jerk fails so hard, his money and powerful connections can't fix it, can't save face, can't let him fail upwards as usual.
I think it's like a weirdo fantasy that maybe the rich and powerful will all learn their lesson by proxy if this goes up in flames bad enough.
And failing that, it's schadenfreude for all the not billionaires who are just sick to death of money insulating the rich from the consequences of their actions which all too often seem to hurt anyone and everyone but them.
/wild ass guess department
Elon Musk Values Twitter at $20 Billion
The billionaire bought the social media company for $44 billion in October and took it private.
https://www.nytimes.com/2023/03/26/technology/elon-musk-twit...
I rounded up to 25 billion because it's been over a week. ;)
On top of this, the platform's recent efforts to limit API usage have negatively affected both regular users and SaaS products that rely on Twitter analytics. With these mounting challenges, the company's survival is increasingly uncertain, and some are predicting bankruptcy as a potential outcome. The long-term impact of these developments remains to be seen.