Can Elon Musk Make Twitter’s Numbers Work?

Nonetheless, the rates of interest on the loans mirror the danger that they won’t receives a commission again. The banks don’t maintain on to the loans however promote them to different buyers out there, so if Twitter can’t pay its money owed, Mr. Musk will both should pay these buyers, maybe by promoting extra Tesla inventory, or he might cede some a part of his possession of Twitter, diluting his stake.

Tesla had a market worth of $902 billion as of Friday, however its shares have fallen by almost 20 % since Mr. Musk first revealed, in early April, that he had purchased an enormous stake in Twitter. If Twitter’s funds go south, forcing Mr. Musk to promote extra Tesla inventory to pay Twitter’s money owed or pledge extra shares as collateral for his private loans, it might put additional stress on Tesla’s inventory worth. Mr. Musk doesn’t take a wage from Tesla however is paid in inventory that’s launched based mostly on efficiency milestones that embody the corporate’s share worth.

Since Mr. Musk first disclosed his stake, the tech-heavy Nasdaq index has fallen greater than 10 %, making his provide seem much more beneficiant. “It’s a excessive worth and your shareholders will like it,” Mr. Musk mentioned in a letter to Twitter’s board. Though the social media firm’s inventory had traded greater than Mr. Musk’s provide simply six months in the past, it slumped far under that worth early this yr and seemed unlikely to return to these highs any time quickly.

Mr. Musk has thought of teaming up with funding companies in his bid to purchase Twitter, which would scale back the sum of money he would personally have to speculate. He might nonetheless companion with a agency or different buyers like household workplaces to assist increase money, based on two folks with data of the discussions.

Thoma Bravo, a technology-focused buyout agency, has expressed willingness to supply some financing, however nothing has been determined but. Apollo, another asset supervisor, additionally checked out a doable deal the place it might lengthen a mortgage on most well-liked phrases.

If the deal math turns into unpalatable for Mr. Musk, he has an out: a breakup price of $1 billion. For a person with an estimated fortune nicely over $200 billion, that’s a small worth to pay.