Follow the money.
Twitter borrowed $13 billion as part of the $44 billion purchase price.
Annual interest payments are estimated at $1.2 billion. That is more money than Twitter earned in 2021.
When Federal Reserve raises interest rates, the yield on the loans rises.
Guess what the Fed did this week? Raised interest rates.
Twitter is in serious trouble, and I won't be surprised when they go bankrupt.
Interesting question - like the people who sold the mining equipment in the gold rush. I guess if you could find out if there were any publicly traded IT companies that host Mastodon instances for others, that could be one way to do this.
@MayWeAllRise @RedTRaccoon Remember that he locked himself in a purchase agreement with Twitter that he would’ve had to pay $1bn to get out of (and even tried via the courts and failed).
Truly extravagant business prowess on display here. /s
@MayWeAllRise @RedTRaccoon It seems to be part of the purchase agreement; however this is not my area of expertise, so I’m not sure if this is common or not.
🔗 https://www.sec.gov/Archives/edgar/data/1418091/000119312522120474/d310843ddefa14a.htm
That's called a leveraged buyout. You can do it if a bank is willing to take the risk and lend the money. In this case, the deal was bad for the banks, which are already underwater on the loans, and good for Musk, who gets to shift $13 billion of his losses to the banks if Twitter goes bankrupt.
As a business decision, it was terrible, because the rising interest rate means that Twitter is saddled with debt payments far in excess of its earnings.
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