There was $13 billion of debt used to finance the buy-out. It's a leveraged buy-out, so the target company owns the debt, not the buyer.
How do you think that debt ends up getting paid off? It'll be close to $1 billion every year just to service that debt.
Given that:
* Twitter has only ever made a profit in 2018 and 2019
* That the profits it made in those two years were $1.2bn and $1.4bn respectively (only just enough to service this new debt)
* That for 2020 and 2021 other tech companies were comparatively minting it, but Twitter burned ~$1.3bn
* The world is generally in the early phases of what is likely to a deep recession, with ad spend and consumer spending already well down
It feels like a bit of an interesting purchase, to say the least.
It should be noted that the plan to charge users $8 per month for a blue verification badge wouldn't even service the debt if 25 times more people bought it than currently have it for free.
It's also playing a role in his shareholders of Tesla view Musk. A recent Opening Arguments podcast explains how they could actually sue him for irresponsible behaviour that goes against his fiduciary responsibility to the shareholders. He basically tanked Tesla shares raising money for the Twitter deal. That's not maximizing the value of the shares, it's the opposite.
How do you think that debt ends up getting paid off? It'll be close to $1 billion every year just to service that debt.
Given that:
* Twitter has only ever made a profit in 2018 and 2019
* That the profits it made in those two years were $1.2bn and $1.4bn respectively (only just enough to service this new debt)
* That for 2020 and 2021 other tech companies were comparatively minting it, but Twitter burned ~$1.3bn
* The world is generally in the early phases of what is likely to a deep recession, with ad spend and consumer spending already well down
It feels like a bit of an interesting purchase, to say the least.
It should be noted that the plan to charge users $8 per month for a blue verification badge wouldn't even service the debt if 25 times more people bought it than currently have it for free.