back to article Elon Musk says he can get $46.5bn to buy Twitter

The world's richest man Elon Musk has said how he can get his hands on $46.5 billion to take over Twitter, explaining that more than half of that figure will come from banks via debt financing.  Musk (net worth: $270 billion) said he'll provide $21 billion himself while the remaining $25.5 billion will be financed by Morgan …

  1. Marcelo Rodrigues
    Happy

    Well, it doesn't matternif You loke hom or not.

    Both Tesla and SpaceX are doing (relatively) well.

    And, peronaly, I wold bet my chips on SpaceX. They are really doing well...

    1. katrinab Silver badge
      Meh

      SpaceX customers are certainly very happy with the service they receive, but I’m not so sure about its ability to make money.

      Tesla is making a profit, but it would need to be about 20x bigger than it currently is to justify its share price, and that would be more than 100% of the total car market.

      1. Anonymous Coward
        Anonymous Coward

        SpaceX is his most solid buisness at this point.

        While it took an enormous amount of capitol to get off the ground, the company at this point is solid. If it went public tomorrow it would wipe the floor with the rest of the heavy lift launch space. That said it won't be going public, as Musk clearly intends to push for engineering milestones that conflict with maximizing short term returns to shareholders.

        Tesla isn't a bad company, but is both overhyped and overvalued. Most of the rest of his portfolio are moonshots that are no where near ready for prime time. SpaceX is the only one I would buy, but I can't and probably won't be able to any time soon.

        1. bazza Silver badge

          Re: SpaceX is his most solid buisness at this point.

          SpaceX is not solid. Falcon 9 works and has customers, but Starship is not finished. Only when it is finished, and only when they have Starlink earning full revenue will the company itself be solid.

          1. Filippo Silver badge

            Re: SpaceX is his most solid buisness at this point.

            I'm not sure of the logic there. Most big companies have some things that make money, and some things in R&D. Nobody claims the companies aren't solid just because the stuff in R&D isn't ready for market.

            1. Jellied Eel Silver badge

              Re: SpaceX is his most solid buisness at this point.

              Some people claim that. Notably people who asked when Theranos's Edison machine would leave R&D.

              The Musk empire has much the same problem. The semi, cybertruck and quad should have been available years ago. Starship should be on Mars. FSD was available now, years ago. Solar City will be great for shareholders other than the Musk family.

              Basically much promised, little delivered, and a vastly inflated share price that's securing the Musk portfolio. And borrowing more secured by Tesla stock has risks for Tesla, ie share price drops, and Musk being forced to sell. Or just Musk being distracted, and not focused on Tesla.

              1. Gordon 10 Silver badge

                Re: SpaceX is his most solid buisness at this point.

                I would take issue with much promised and little delivered. Yes he overhypes but none of the deliveries that Tesla and SpaceX have managed have been achieved by any of the incumbents in those industries.

                (3 if you count paypal)

                Cheapest Space Launch system ever.

                Biggest Electric Car manufacturer.

                Best Charging network.

                Like it or not - he's a disrupter in the true sense of the word - not the VC bullshit sense of the world.

                1. Anonymous Coward
                  Anonymous Coward

                  Re: SpaceX is his most solid buisness at this point.

                  Best Charging network lock in

                  Fixed it for you. If you dare use spare parts of another tesla to fix yours, Tesla is likely to blcok your car from using fast charging. Yes they can, and they will, it's a known fact. No Right To Repair for Tesla owners, I'm afraid. I don't have that problem with any other EV on the market as those use interoperable standards and some can now handle 270kW charging.

                  Tesla is becoming the Microsoft of the EV market: locking people in so they can get away with delivering at best mediocre quality. But you knew that, that's why you called them Biggest and not Best :).

              2. Filippo Silver badge

                Re: SpaceX is his most solid buisness at this point.

                Theranos didn't have anything on the market, making actual profits. SpaceX is running real missions, at a profit. That's what matters. It's spending a shitload on R&D, but that can be easily slashed if some kind of crunch arrives.

                1. Jellied Eel Silver badge

                  Re: SpaceX is his most solid buisness at this point.

                  How do you know SpaceX is profitable? Or, assuming competitors get off the ground, will remain profitable. I'm curious how much Starship has cost vs demand for >50t payloads. But commercial service seems some way off. It'll no doubt keep picking up government contracts, until that competition arrives. Then there'll be pressure to spread the pork around multiple congressional districts.

                  And sure, R&D could be cut. But that might delay cybertruck, semi, roadster, starship, starlink etc even more. Especially with another company added to the empire. So with less development and no product converting from vapourware to deliverable, Tesla continues to lose market, share price falls, and the house of cards collapses.

        2. Anonymous Coward
          Anonymous Coward

          Re: SpaceX is his most solid buisness at this point.

          Tesla's Model S was a good car, the Model T was already too gimmicky and then he went the Mercedes way, using the established reputation to get away with low quality, with the difference that Mercedes has overcome this period but Tesla is still in the denial phase.

          If Musk can stop the BS long enough to correct this, fine, otherwise they're about to have a problem with both what is coming out of China (which is maybe why he is buying Twitter - like all US companies he'll try to get the government to stop competition and publicity is vital for that) as well as European car manufacturers who are not only catching up but actually have a decent dealer network in place - Tesla's main problem in Europe, exacerbating the reputational damage of all the production quality problems with all but the fans.

          Mercedes, for instance, recently managed to clock over a 1000km on the same sort of battery with still some 10% of charge left which indicates that we're nowhere near the end of EV development yet.

          So no, I would not bet on Tesla, especilly since the shares also drift on hype and trade way above reality. That correction is going to be ugly, but I reckon it's at least a year away unless Musk does something stupid like pulling a Ratners.

      2. LybsterRoy Bronze badge

        "justify" "share price"

        I'm not certain I've ever seen those two concepts genuinely linked.

        1. SundogUK Silver badge

          Yeah, that's a category error. A share price is simply the price people are prepared to pay at this point in time. If more people want those shares, demand increases but supply remains fixed, so the price will go up. "Justified" has nothing to do with it. This is economics 101.

      3. Hans Neeson-Bumpsadese Silver badge

        Tesla is making a profit, but it would need to be about 20x bigger than it currently is to justify its share price, and that would be more than 100% of the total car market.

        Your numbers here are with respect to them as a car company. I read something (admittedly it was on the Internet so may not be factually accurate) that suggests it's inaccurate to view them as a car company - they actually make a loss on every single vehicle they produce. The profit comes from carbon credits.

        1. katrinab Silver badge

          A few years ago they were making a loss on every car, but they are now profitable, mainly because production is now running at full capacity.

      4. John Brown (no body) Silver badge

        "Tesla is making a profit, but it would need to be about 20x bigger than it currently is to justify its share price, and that would be more than 100% of the total car market."

        Share prices and corporate valuations are just fantasy wishes of gamblers investors, primarily short-term get-rich-quick types. The real investors, those with large stakes, are looking at long term trends, not short terms gains/losses. Just look at what happened to Netflix shares. It was obvious to everyone with an ounce of common sense there was a going to be a huge growth during lockdown and a huge reverse afterwards. The get-rich-quick investors piled in at the start of the rise and the smartest ones already divested as people went back to work.There's probably a lot of smaller investors that were late in when lockdowns started and have lost a lot by being late to divest. The big investors will mostly still be in because they've been in a long time, made a lot of paper profit and see the huge pandemic value rise as a blip. The price is still above what it was 5 years ago and will likely recover some of the recent days falls so those long term investors will probably still be quids in in the long run. Telsa has had drops in the 20% region a couple of times, but the trend is upwards overall, and are still massively overvalued.

  2. Adrian 4 Silver badge

    Musk continues to go down-market.

    First space,

    Then down to cars, albeit electric

    Now a social network

    What's next ? PCs, followed by second-hand phones, a vape shop and a fried chicken stall in a street market ?

    1. badflorist

      I know your joking but, I'm thinking real estate. Your bank will raise your interests rates to pay for this billionaires investments, so eventually when the banks go negative on this investment, Musk will work a deal to acquire real estate to further invest within the banks... and further raise your interests rates.

      1. Gordon 10 Silver badge
        FAIL

        That ain't how interest rates work.

    2. Graham Dawson Silver badge
      Pint

      I could go for a musky kebab.

      1. John Brown (no body) Silver badge

        I'd probably take my kebab back if it smelled a bit Musky!

    3. Anonymous Coward
      Anonymous Coward

      $46B for an SMS service ... and a mostly crappy one at that ... what is the world coming to ...

      1. Anonymous Coward
        Anonymous Coward

        An SMS that has a disproportionate influence over world media. Twitter is stuffed to the rafters with journalists, who see it as a lazy substitute for actual newsgathering. Stories that should have been nothingburgers become worldwide headline news because of the amplification effect this causes.

    4. GruntyMcPugh

      Tequila!

  3. Anonymous Coward
    Anonymous Coward

    The great pretender

    A legend in his own lunch-box

  4. Flocke Kroes Silver badge

    Next Monster Raving Loony candidate for President

    One of the requirements for eligibility is that POTUS must be a natural-born citizen of the United States. The delusional vote would get split between people saying he was born in Kenya and demanding to see his birth certificate and people pretending he is eligible despite being born in South Africa.

    1. Khaptain

      Re: Next Monster Raving Loony candidate for President

      Look at those already in power and then you realize that Elon Musk would probably be a far better candidate.

      It feels as though Clown World has become the defacto state of affaires.

    2. SundogUK Silver badge

      Re: Next Monster Raving Loony candidate for President

      Well, that's a rather pathetic straw man.

    3. Cliffwilliams44 Bronze badge

      Re: Next Monster Raving Loony candidate for President

      Musk makes no false claims. He was born in Canada to Canadian parents and moved to S. Africa when a young child.

      So no, he can't

  5. Doctor Evil

    Wait, what?

    "Elon Musk says he can get $46.5bn to buy Twitter"

    Wasn't tweeting something like that what got him into hot water with the SEC in the first place?

    1. Flocke Kroes Silver badge

      Re: Wait, what?

      Last time the tweet included "funding secured" when it decisively wasn't. This time there is actual evidence that he has the funding. Perhaps this is because he is only part way through trying to redefine "funding secured" (and "founder member"). Musk successfully redefined what calling someone "pedo" in a tweet means and assumes he can get away with lies like Steve Jobs. I think a more appropriate example would be Elizabeth Holmes. One of the few laws that still applies to the rich is "thou shalt not lie to rich investors too often".

      1. Gordon 10 Silver badge

        Re: Wait, what?

        I don't think the Holme's comparison is valid. She was a total fraud. Musk (the public persona) is more of a PT Barnum figure, but genuinely successful at multiple things he puts his mind to.

        By comparison his peers like Bezos and Gates are one trick ponies. - albeit very successful ones.

        1. Anonymous Coward
          Anonymous Coward

          Re: Wait, what?

          genuinely successful at multiple things he puts his mind to

          With enough (borrowed) moneya nd a lot of hype you can simulate success for a long time, look at Trump.

          However, eventually reality comes a-knocking and a correction follows. I hope it'll be gentle as the first move is otherwise always booting people onto the streets which appears to be fantastically easy in the US (and here too with only miniature fines if you're managing P&O, but I digress).

  6. Pascal Monett Silver badge

    Ah, the beauty of having all the money in the world

    You can lift a finger, and banks will fall over themselves to loan you billions more.

    I fully understand the financial operations involved, and I get why the banks are willing, but honestly, with his fortune, shouldn't the banks just be : "meh, you've got the money, finance this yourself" ?

    But of course, that's not the kind of world we live in.

    1. Flocke Kroes Silver badge

      Re: Ah, the beauty of having all the money in the world

      As Mork said: "It is easier to repossess a boat or a car than food."

      US taxes assess the value of his shares when he bought them and when he sells them, not there current value. Selling shares now would trigger another enormous tax bill. Borrowing against them does not. The shares are massively over-valued. If he buys Twitter and trashes the share value he can do a Trump an set the loss against every future tax bill.

      1. SundogUK Silver badge

        Re: Ah, the beauty of having all the money in the world

        "The shares are massively over-valued." - In your opinion. Since the value of the shares is exactly what people are prepared to pay for them, your opinion is irrelevant.

        1. John Brown (no body) Silver badge

          Re: Ah, the beauty of having all the money in the world

          Herd mentality. People can be made to believe ANYTHING if they think that everyone else believes it too. Also known as mob mentality. Convince enough people that your election was stolen and they'll invade seat of government.

          1. SundogUK Silver badge

            Re: Ah, the beauty of having all the money in the world

            "Herd mentality" - lots of people doing stuff I disagree with.

            "Convince enough people that your election was stolen and they'll be invited in to your seat of government." - FIFY.

      2. Cliffwilliams44 Bronze badge

        Re: Ah, the beauty of having all the money in the world

        Well its not like the current leadership of Twitter have done a bang up job. Twitter has consistently lost share value since IPO. It's own founder calls it a terribly run company!

        "If he buys Twitter and trashes the share value he can do a Trump an set the loss against every future tax bill."

        Yeah, lets vilify people for doing what's legal and ignore the rampant corruption the current President is involved in.

    2. Filippo Silver badge

      Re: Ah, the beauty of having all the money in the world

      > shouldn't the banks just be : "meh, you've got the money, finance this yourself" ?

      Why would they? Making loans is a major part of a bank's business. It's literally what they are supposed to do. It's as if you asked why McDonald's wouldn't say "meh, make the burger yourself".

      Now, if you mean why they seem to loan easily to people who don't actually need a loan, it's because a person who doesn't need the loan is unlikely to default on it, and has shiny stuff you can take if he does. It's basically risk-free, easy money for the bank. Not so much for someone who actually needs the loan.

      The situation arises directly from the concept of "loan" and some basic math. I'm not sure how a world where that isn't true would look like. I suspect you'd need an extreme post-scarcity utopia.

      1. John Brown (no body) Silver badge

        Re: Ah, the beauty of having all the money in the world

        "It's basically risk-free, easy money for the bank. Not so much for someone who actually needs the loan."

        That's the bit that feels so wrong about the entire system. How can it be cheaper to borrow and spend other peoples money rather then spending your own?

        (Yes, yes, I know, investing in bigger returns than the loan costs etc etc, but it still "feels" wrong, especially when it's a successful, debt-free company that gets bought out with debt-financed loans, eating into it's profits and putting them onto the debt-ridden merry-go-round)

    3. PhilipN

      Re: Ah, the beauty of having all the money in the world

      The world we live in is the one in which banks already have the entire funding covered by their portfolio investment clients. The banks do not have to risk a single cent of their own money**

      **except they do of course (but only technically) when they can book a profit in 5 minutes, 5 hours or 5 days it takes them to toss the thing over to their kept-in-the-dark clients with whom they have discretionary management arrangements.

      1. fandom

        Re: Ah, the beauty of having all the money in the world

        Absolutely, that's why no bank went broke in 2007-09.

    4. Someone Else Silver badge

      Re: Ah, the beauty of having all the money in the world

      You can not lift a finger, and banks will still fall over themselves to loan you billions more.

      There. FTFY.

  7. Howard Sway Silver badge

    The remaining $25.5 billion will be financed by Morgan Stanley, Bank of America, Barclays...

    Does a hugely debt-leveraged buyout really seem such a good idea when they're betting the money on such a loose cannon as Musk? To recoup that sort of money Twitter will have to become drenched in advertising, and when that's combined with the unfiltered sewage that will deluge the place once Musk's free speech crusade gets underway and the inevitable paid promotion of tweets and "premium" subscription memberships arrive, there's surely a risk that a more sane competitor site might spring up and sink them and make that investment vanish quite quickly.

    1. Filippo Silver badge

      Re: The remaining $25.5 billion will be financed by Morgan Stanley, Bank of America, Barclays...

      The buyout is dubious, but Musk can almost certainly repay the loan even if he proceeds to sink Twitter into the ground. He'd just have to sell bits of Tesla and SpaceX. He'd hate it, but he'd have to. From the point of view of the banks, it's a good deal.

      1. Doctor Syntax Silver badge

        Re: The remaining $25.5 billion will be financed by Morgan Stanley, Bank of America, Barclays...

        "From the point of view of the banks, it's a good deal."

        That would depend on how much they're invested in Tesla & Space X. If he sld bit of that their share price would go down.

    2. Cederic Silver badge

      Re: The remaining $25.5 billion will be financed by Morgan Stanley, Bank of America, Barclays...

      Surely the debt isn't leveraged on Twitter but on Musk's other shareholdings. So Twitter could die in acid but Musk still owes the funds to the banks.

      1. Doctor Syntax Silver badge

        Re: The remaining $25.5 billion will be financed by Morgan Stanley, Bank of America, Barclays...

        You missed out a word from the first sentence: "yet".

    3. SundogUK Silver badge

      Re: The remaining $25.5 billion will be financed by Morgan Stanley, Bank of America, Barclays...

      "...they're betting the money on such a loose cannon as Musk?"

      Who just happens to be the richest man in the world right now?

    4. GruntyMcPugh

      Re: The remaining $25.5 billion will be financed by Morgan Stanley, Bank of America, Barclays...

      The 'Free Speech' goal will kill Twitter in Europe, that mandates hate speech be removed from social media in a timely fashion: https://www.npr.org/2022/04/23/1094485542/eu-law-big-tech-hate-speech-disinformation

  8. charlieboywoof

    Well that extreme censoring left wing website needs destroying ASAP. Go Musk go

    1. Flocke Kroes Silver badge

      Partisan politics finds some common ground!

      An extreme left wing point of view is that the racist recruiting web site needs destroying ASAP and that removal of censorship would achieve that.

  9. Dan 55 Silver badge

    Can't he just buy gab?

    It would be cheaper and he'd about the same amount of users as Twitter will do after all the sane people have left after he implements his "anything goes" rule.

  10. 89724102172714182892114I7551670349743096734346773478647892349863592355648544996312855148587659264921 Bronze badge

    Musk wants The Orange One in office because he fears the gathering storm of peasants bearing torches and pitchforks, demanding his wealth and head.

    1. fandom

      Thing is his wealth is in his share of his companies and, after the peasants take them over, they wouldn't be worth anything much.

    2. Flocke Kroes Silver badge

      Found the evil plan

      Musk is not afraid of peasants with pitchforks - his security team can shoot them. What would really chew up his wealth is short sellers with Twitter.

      Tesla is massively over valued and an obvious target for short sellers. Musk will not sell because then he would lose control. Instead he can borrow against the market value of his shares to make acquisitions. If Tesla tanks he can repay the loans by selling the acquisitions. As a bonus, his hatred of free speech combined with ownership of Twitter could be used to silence short sellers - who he hates even more than the SEC.

  11. Ken Hagan Gold badge

    $46.5 billion is just the start

    The current asking price is roughly 15-years-worth of profits. Unless he can make Twitter *more* profitable, not less, this is purely a vanity play for him. However, once Elon's "anything goes" policy takes effect, he'll be paying out loads in legal fees and fines just to keep the show on the road, and advertisers will think twice about associating themselves with a toxic brand. If I were a shareholder, I'd be looking to cash out at the top of the market and invest somewhere else.

    1. Cuddles Silver badge

      Re: $46.5 billion is just the start

      "The current asking price is roughly 15-years-worth of profits."

      Of whose profits, exactly? Twitter has had big losses for the last couple of years, as well as most of the rest of its history.

  12. marcellothearcane

    Would it be possible to put income tax on loans backed by shares? Currently taxes are only due when you sell them, however this is a massive tax loophole that rich people use.

  13. Securitymoose
    Childcatcher

    I wouldn't give a fiver for it

    Doesn't the man realise that Twitter is last decade's thing? The yoof have moved to other platforms, leaving us wrinklies adding comments that nobody bothers reading because we aren't in Celebrity Bake Off.

    Waste of the money he could otherwise spend on medical research and other desperate charities.

    1. Someone Else Silver badge

      Re: I wouldn't give a fiver for it

      Waste of the money he could otherwise spend on medical research and other desperate charities.

      Putting money into those things doesn't stroke his tRumpian-sized ego. And would require something called 'empathy'. You don't become the world's largest fatass richest man by having empathy.

  14. Big_Boomer

    Muskies

    It is interesting reading the comments and seeing the Muskies gushing over how "amazing" the man is. Reminds me of the Jobs fanboiz and many others over the years. He's not a saint and he never will be so why are people worshipping him? Why do people feel the need to worship someone? Is this the new church of the Twatter era? The only reason these people develop these ridiculous egos is because there are enough morons worshipping them to convince them that maybe they are special. I'm not belittling Musk or Jobs. They are people just like everyone else and are not worthy of anyone's worship.

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