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(Al Jazeera)   How Elon financed buying Twitter - turns out God was also in for a $bil   (aljazeera.com) divider line
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    More: Followup, Morgan Stanley, Bank of America, Finance, Mitsubishi UFJ Financial Group, Al-Waleed bin Talal, Qatar Holding, Elon Musk, bank loans  
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1302 clicks; posted to Business » on 28 Oct 2022 at 9:20 AM (22 weeks ago)   |   Favorite    |   share:  Share on Twitter share via Email Share on Facebook



38 Comments     (+0 »)
View Voting Results: Smartest and Funniest
 
OdradekRex [TotalFark] [OhFark]
2022-10-28 8:06:40 AM  
There are going to be a lot of pissed off investors next year.
 
Marcus Aurelius [TotalFark] [OhFark]
2022-10-28 8:12:53 AM  
Saudi was smart, they gave their shares back as a "gift".  They know worthless when they see it.
 
BizarreMan [TotalFark]
2022-10-28 8:12:58 AM  
I seriously don't understand why anyone would want to drop all that cash on something that hasn't been making money and may never make money.

It's not like any of the investors are known for their philanthropy.
 
NewportBarGuy [TotalFark] [OhFark]
2022-10-28 8:13:37 AM  
A large part of that, around $12.5bn, was set to have come from loans backed by his shares in the electric car company - meaning he would not have had to sell those shares.

This also means there is a strike price at which Elon will be forced to sell if it goes below or stays below for a certain period...

So, if TSLA stock takes a header, he has to sell, which will drive the price down further and give that money to the banks to cover the loan.

It's a very risky play in this environment.
 
DoBeDoBeDo [TotalFark]
2022-10-28 8:14:40 AM  
Morgan Stanley dropped $3.5 billion for a company they know doesn't make money.

That doesn't seem like it will be a case study for a future economics class at all.
 
NewportBarGuy [TotalFark] [OhFark]
2022-10-28 8:15:39 AM  

BizarreMan: I seriously don't understand why anyone would want to drop all that cash on something that hasn't been making money and may never make money.

It's not like any of the investors are known for their philanthropy.


It was a bluff and he got called on it. Also, the tech market absolutely imploded almost the moment he made that bluff.

He basically lost $40 billion while tweeting high and drunk.

But, he will now endeavor to make us all pay for it.
 
Gubbo [TotalFark] [OhFark]
2022-10-28 8:43:33 AM  

NewportBarGuy: A large part of that, around $12.5bn, was set to have come from loans backed by his shares in the electric car company - meaning he would not have had to sell those shares.

This also means there is a strike price at which Elon will be forced to sell if it goes below or stays below for a certain period...

So, if TSLA stock takes a header, he has to sell, which will drive the price down further and give that money to the banks to cover the loan.

It's a very risky play in this environment.


The very next line says that he didn't end up doing that.
 
Gubbo [TotalFark] [OhFark]
2022-10-28 8:44:35 AM  

DoBeDoBeDo: Morgan Stanley dropped $3.5 billion for a company they know doesn't make money.

That doesn't seem like it will be a case study for a future economics class at all.


Morgan, and the banks, have made so many idiot decisions in their past. A mere $3 billion loan might only make an appendix.
 
NewportBarGuy [TotalFark] [OhFark]
2022-10-28 8:47:08 AM  

Gubbo: NewportBarGuy: A large part of that, around $12.5bn, was set to have come from loans backed by his shares in the electric car company - meaning he would not have had to sell those shares.

This also means there is a strike price at which Elon will be forced to sell if it goes below or stays below for a certain period...

So, if TSLA stock takes a header, he has to sell, which will drive the price down further and give that money to the banks to cover the loan.

It's a very risky play in this environment.

The very next line says that he didn't end up doing that.


Oh... I'm f*cking illiterate. I didn't know he changed that part. Interesting. That means he knows the stock price can't support the loan. Or the loan wasn't very favorable considering the changing interest rate conditions.

i stand corrected!
 
Marcus Aurelius [TotalFark] [OhFark]
2022-10-28 9:18:42 AM  

NewportBarGuy: A large part of that, around $12.5bn, was set to have come from loans backed by his shares in the electric car company - meaning he would not have had to sell those shares.

This also means there is a strike price at which Elon will be forced to sell if it goes below or stays below for a certain period...

So, if TSLA stock takes a header, he has to sell, which will drive the price down further and give that money to the banks to cover the loan.

It's a very risky play in this environment.


It sounds like someone finally got the message through to him about how seriously Delaware takes corporate law.  It's like that scene in Pirates of the Caribbean when Keith Richards showed up.  Elon's mouth bit off a lot more than it could chew, and now he's going to suffer severe indigestion, poor thing.
 
Marcus Aurelius [TotalFark] [OhFark]
2022-10-28 9:19:42 AM  

NewportBarGuy: Gubbo: NewportBarGuy: A large part of that, around $12.5bn, was set to have come from loans backed by his shares in the electric car company - meaning he would not have had to sell those shares.

This also means there is a strike price at which Elon will be forced to sell if it goes below or stays below for a certain period...

So, if TSLA stock takes a header, he has to sell, which will drive the price down further and give that money to the banks to cover the loan.

It's a very risky play in this environment.

The very next line says that he didn't end up doing that.

Oh... I'm f*cking illiterate. I didn't know he changed that part. Interesting. That means he knows the stock price can't support the loan. Or the loan wasn't very favorable considering the changing interest rate conditions.

i stand corrected!


I didn't RTFA, so I'm still uncorrected.  It's Friday, so I shall persist in that state for now.
 
clkeagle [BareFark]
2022-10-28 9:32:28 AM  

DoBeDoBeDo: Morgan Stanley dropped $3.5 billion for a company they know doesn't make money.

That doesn't seem like it will be a case study for a future economics class at all.


This feels deliberate. They are just planning to write off a $3.5b loss and pay zero taxes for the next ten years.
 
OhioUGrad
2022-10-28 9:33:57 AM  
I love seeing Elon and Zuck race to the bottom.

Absolutely fantastic.
 
max_pooper
2022-10-28 9:34:16 AM  

NewportBarGuy: Gubbo: NewportBarGuy: A large part of that, around $12.5bn, was set to have come from loans backed by his shares in the electric car company - meaning he would not have had to sell those shares.

This also means there is a strike price at which Elon will be forced to sell if it goes below or stays below for a certain period...

So, if TSLA stock takes a header, he has to sell, which will drive the price down further and give that money to the banks to cover the loan.

It's a very risky play in this environment.

The very next line says that he didn't end up doing that.

Oh... I'm f*cking illiterate. I didn't know he changed that part. Interesting. That means he knows the stock price can't support the loan. Or the loan wasn't very favorable considering the changing interest rate conditions.

i stand corrected!


My guess is he realized that Tesla stock is overvalued so he was better off selling high instead of being forced to sell low when his Twitter foray eventually fails.

It looks like he's going to be out $15.5B with a lot of pissed of investors and banks when he runs the already financially struggling company into the ground. Will the banks and investors learn their lesson about investing in mouthy, hotheaded, micromanager? We shall see.
 
tricycleracer
2022-10-28 9:35:25 AM  
All for a crappy website.
 
max_pooper
2022-10-28 9:40:17 AM  

clkeagle: DoBeDoBeDo: Morgan Stanley dropped $3.5 billion for a company they know doesn't make money.

That doesn't seem like it will be a case study for a future economics class at all.

This feels deliberate. They are just planning to write off a $3.5b loss and pay zero taxes for the next ten years.


That doesn't make sense. Why would a company light money on fire instead of paying taxes? With lighting it on fire they have nothing left. With keeping and paying taxes, they have after tax profit. Having money is always better than not having money.
 
Gubbo [TotalFark] [OhFark]
2022-10-28 9:48:25 AM  

max_pooper: clkeagle: DoBeDoBeDo: Morgan Stanley dropped $3.5 billion for a company they know doesn't make money.

That doesn't seem like it will be a case study for a future economics class at all.

This feels deliberate. They are just planning to write off a $3.5b loss and pay zero taxes for the next ten years.

That doesn't make sense. Why would a company light money on fire instead of paying taxes? With lighting it on fire they have nothing left. With keeping and paying taxes, they have after tax profit. Having money is always better than not having money.


I wonder is their loan secured on anything. Or convertible to equity in case of missed payments.

/there will be missed payments
 
WelldeadLink
2022-10-28 9:48:28 AM  

Marcus Aurelius: Saudi was smart, they gave their shares back as a "gift".  They know worthless when they see it.


"Prince Alwaleed bin Talal of Saudi Arabia transferred to Musk the nearly 35 million shares he already owned.
In exchange for their investments, the contributors will become Twitter shareholders."

So he gave shares so he could get shares.
 
Marcus Aurelius [TotalFark] [OhFark]
2022-10-28 9:55:55 AM  

WelldeadLink: Marcus Aurelius: Saudi was smart, they gave their shares back as a "gift".  They know worthless when they see it.

"Prince Alwaleed bin Talal of Saudi Arabia transferred to Musk the nearly 35 million shares he already owned.
In exchange for their investments, the contributors will become Twitter shareholders."

So he gave shares so he could get shares.


He still gave him nothing of value.
 
Pats_Cloth_Coat
2022-10-28 10:00:39 AM  

max_pooper: clkeagle: DoBeDoBeDo: Morgan Stanley dropped $3.5 billion for a company they know doesn't make money.

That doesn't seem like it will be a case study for a future economics class at all.

This feels deliberate. They are just planning to write off a $3.5b loss and pay zero taxes for the next ten years.

That doesn't make sense. Why would a company light money on fire instead of paying taxes? With lighting it on fire they have nothing left. With keeping and paying taxes, they have after tax profit. Having money is always better than not having money.


Political leverage. If you can get twitter to promote or suppress news stories you wield a lot of power
 
akallen404
2022-10-28 10:08:56 AM  

OhioUGrad: I love seeing Elon and Zuck race to the bottom.

Absolutely fantastic.


It's easier to eat the rich when the rich are already eating themselves
 
Muta
2022-10-28 10:17:43 AM  

Marcus Aurelius: WelldeadLink: Marcus Aurelius: Saudi was smart, they gave their shares back as a "gift".  They know worthless when they see it.

"Prince Alwaleed bin Talal of Saudi Arabia transferred to Musk the nearly 35 million shares he already owned.
In exchange for their investments, the contributors will become Twitter shareholders."

So he gave shares so he could get shares.

He still gave him nothing of value.


Musk was buying Twitter for $54.20/ share so Prince gave him $1,897,000,000 in exchange for that much equity in the company which is probably worth much less (but probably not zero).
 
QFarker
2022-10-28 10:18:24 AM  
That still won't make me sign up for a twitter account.
 
Olympic Trolling Judge
2022-10-28 10:21:11 AM  
An interesting point I saw elsewhere (on Twitter itself, as a matter of fact): because the financing was locked in before interest rates started rising, the banks are gonna have a hard time selling their debt to third parties. People would rather buy debt created now, with a higher rate of return. Elon's dithering screwed them big time.
 
OhioUGrad
2022-10-28 10:21:24 AM  

OhioUGrad: I love seeing Elon and Zuck race to the bottom.

Absolutely fantastic.


Forgot to post all these classics which I believe people need a reminder of
Fark user imageView Full Size
Fark user imageView Full Size
Fark user imageView Full Size
Fark user imageView Full Size
Fark user imageView Full Size
Fark user imageView Full Size
 
Manfred J. Hattan
2022-10-28 10:25:14 AM  

DoBeDoBeDo: Morgan Stanley dropped $3.5 billion for a company they know doesn't make money.

That doesn't seem like it will be a case study for a future economics class at all.


Meh. It's a loan behind a ton of equity. Musk overpaid, but you'd have to believe that Twitter is worth less than around $15 billion (or will become worth less under new ownership) for the loan to go bad. That might be right, but it's not like it's a screaming obvious thing.
 
Rapmaster2000
2022-10-28 10:38:08 AM  
It can't be understated the incredible wealth of the Saudi Royal Family.  They have 1.4 TRILLION.  They just burned 2 billion on WeWork and were like "whatever."  They throwing away billions on a senior golf league that only plays 10 tournaments and which nobody watches.  They can just throw money away on all kinds of nonsense.  I have no doubt that next they'll be trying to create their own FIFA, their own Formula 1, and their own IOC.
 
SeaMan Stainz
2022-10-28 10:40:44 AM  

BizarreMan: I seriously don't understand why anyone would want to drop all that cash on something that hasn't been making money and may never make money.

It's not like any of the investors are known for their philanthropy.


Controlling the propaganda machine is invaluable.
 
tricycleracer
2022-10-28 10:54:34 AM  

Rapmaster2000: It can't be understated the incredible wealth of the Saudi Royal Family.  They have 1.4 TRILLION.  They just burned 2 billion on WeWork and were like "whatever."  They throwing away billions on a senior golf league that only plays 10 tournaments and which nobody watches.  They can just throw money away on all kinds of nonsense.  I have no doubt that next they'll be trying to create their own FIFA, their own Formula 1, and their own IOC.


It's the desperate flailing of a one-commodity economy.  They don't want to be Venezuela.
 
Tyrone Slothrop [TotalFark]
2022-10-28 10:58:06 AM  

BizarreMan: I seriously don't understand why anyone would want to drop all that cash on something that hasn't been making money and may never make money.

It's not like any of the investors are known for their philanthropy.


They want to control Twitter to control the social and political narrative.
 
hammettman
2022-10-28 11:01:56 AM  

BizarreMan: I seriously don't understand why anyone would want to drop all that cash on something that hasn't been making money and may never make money.

It's not like any of the investors are known for their philanthropy.


It's not meant to make money.  Realign your perspective.  The medium is the message.

twitter is not a business.  It is more an advertising agency than anything else, but even that is off the mark.  It has the ability to move points of view on a large scale.  Elon was able to move Tesla stock to the tune of billions with twitter.

In the "right" evil hands, twitter can sway public opinion, move money, beliefs...
 
yet_another_wumpus
2022-10-28 11:12:08 AM  

NewportBarGuy: BizarreMan: I seriously don't understand why anyone would want to drop all that cash on something that hasn't been making money and may never make money.

It's not like any of the investors are known for their philanthropy.

It was a bluff and he got called on it. Also, the tech market absolutely imploded almost the moment he made that bluff.

He basically lost $40 billion while tweeting high and drunk.

But, he will now endeavor to make us all pay for it.


Who is "us all"?  Fark will have to come up with new things to green other than tweets.  "Newsmedia" will have to do more than curate the "tweets of the day".  Other car companies will have to make up the slack if Tesla goes under (the way battery prices are dropping, somebody will be poised to strike with a near complete conversion to eV cars.  And even if Tesla survives, they are unlikely to live up to their valuation).

I'll worry about Spacex, but suspect that they can maintain their position without Elon.  And with Shotwell not having to worry about Elon's tantrums, most likely prosper (albeit with a temporary loss of needed cash).
 
DecemberNitro
2022-10-28 11:16:58 AM  
"$bil"

Fark submitters continue to have the weirdest monetary abbreviations on the internet.
 
Ivo Shandor [TotalFark] [OhFark]
2022-10-28 11:18:23 AM  
Elon had been fighting like hell to weasel out. Then one day he started posting a lot of pro-Russia, anti-Ukraine crap. After that he seemed much more willing to close the deal.

The upcoming court deadlines were certainly part of it, but I would wager that there are some dark-money funding agreements in place too.

Coincidentally the market price of Dogecoin is up more than 40% this week.
 
Rapmaster2000
2022-10-28 11:23:35 AM  

tricycleracer: Rapmaster2000: It can't be understated the incredible wealth of the Saudi Royal Family.  They have 1.4 TRILLION.  They just burned 2 billion on WeWork and were like "whatever."  They throwing away billions on a senior golf league that only plays 10 tournaments and which nobody watches.  They can just throw money away on all kinds of nonsense.  I have no doubt that next they'll be trying to create their own FIFA, their own Formula 1, and their own IOC.

It's the desperate flailing of a one-commodity economy.  They don't want to be Venezuela.


So far, their immense oil production has allowed the whole country to be a welfare state.  Venezuela couldn't accomplish that because there just isn't enough oil to do it.  In SA everyone has a "job" in which they don't actually work that much.
 
DoBeDoBeDo [TotalFark]
2022-10-28 12:45:48 PM  

Manfred J. Hattan: That might be right, but it's not like it's a screaming obvious thing.


2 things

1: Are you actually Jim Cramer?
2: Is there room enough under that rock for both of us?
 
Decorus
2022-10-28 1:46:57 PM  

DoBeDoBeDo: Morgan Stanley dropped $3.5 billion for a company they know doesn't make money.

That doesn't seem like it will be a case study for a future economics class at all.


Yeah I'm like the company doesn't make a profit now and these loans are going to kill it. Then you get nothing as Twitter's parts won't even cover a fraction of the debts. Thinking Elon can improve a private company is idiocy.
 
Snarcoleptic_Hoosier
2022-10-28 3:32:05 PM  

Decorus: DoBeDoBeDo: Morgan Stanley dropped $3.5 billion for a company they know doesn't make money.

That doesn't seem like it will be a case study for a future economics class at all.

Yeah I'm like the company doesn't make a profit now and these loans are going to kill it. Then you get nothing as Twitter's parts won't even cover a fraction of the debts. Thinking Elon can improve a private company is idiocy.


My theory is he's going to dump it publicly with a SPAC. Elon will be something like "executive operations officer" and still allowed to post whatever he likes, but he can hype his own product using his product. We don't prosecute heavily for securities fraud.

His money people know this is a loser, so convince the Tesla fanboys and meme investors to do like-kind equity swaps. Give up your loser Mastercard stock and get an equal value of New Twitter
 
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