Sources familiar with the fundraising campaign, the managing director of Elon Musk’s family office, is looking for new equity investors for Twitter as users revolt, advertisers depart, and debt obligations loom.
This week, Jared Birchall, Musk’s money manager. He contacted potential investors, offering shares of Twitter. The sources said the prices were the same as Musk paid to take the business private in October, $54.20 per share.
In an email to investors, which Semafor examined, Birchall stated, “Over recent weeks, we’ve received numerous inbound requests to invest in Twitter.” “Accordingly, we are pleased to announce a follow-on equity offering for common shares at the original price and terms, targeting a year-end close.”
Ross Gerber, a Tesla investor who claimed to have contributed less than $1 million to Musk’s initial acquisition of tech firm, acknowledged that he spoke with someone Thursday night about a potential new investment round at the $44 billion value.
Gerber stated that he is thinking about it but needs more information on the strategy. “One may debate whether he added value to Twitter or diminished it. At this stage, it’s difficult to say,” he remarked.
Twitter borrowed $13 billion in debt
It will be challenging to convince investors to pay the total price for an asset whose value is falling quickly. Musk may have ideas that could revitalize social media and preserve Twitter, but he is out of time to implement them.
In order to complete the acquisition, Twitter took on $13 billion in debt. Along with $1 billion in interest payments expected each year. That is more money than it made the previous year, and that was before advertisers abandoned the platform in protest over Musk’s laissez-faire attitude toward content regulation.
Musk appears to be in incredible financial difficulty. He reportedly sold more Tesla stock for $3.6 billion on Wednesday. The selling of shares was to give Twitter more equity and reduce its debt. He has sold Tesla shares three times since declaring his retirement in April.
Musk has acknowledged that he overpaid for Twitter and is urging others to do the same.
However, the majority of Musk’s supporters lack economic common sense. Moreover, they are motivated more by fanaticism or a common philosophy than by financial gains.
Bloomberg’s Matt Levine, who has provided some of the most insightful analyses of the Twitter turmoil. He shared a tweeted today. The tweet read, “This is gonna work, isn’t it.” He points out that the basic bet, in this case, is that there are equity investors. The investors who admire Musk will pay $1 for every share of private Twitter. Since no one is purchasing bonds for fun, his bankers are left with a debt they cannot sell.
he's gonna place some equity at 100 while his banks can't get 60 for the debt
— Matt Levine (@matt_levine) December 16, 2022
