Mask’s shenanigans around Twitter are getting weirder
Elon Musk is hooked on Twitter (NYSE:TWTR), and his squirming is getting more and more frantic.
A week after legal pressure forced the Tesla (NASDAQ:TSLA) CEO to renew its offer to buy the social media platform, Twitter shares are still trading at $50.07 per share, down 7.3% from the $54.20 offer price. per share, which gives the company a $44 billion valuation.
True, Musk is probably remorseful: the deal seemed too expensive even in April, when he first proposed it. The Nasdaq has since fallen 20%, leaving Twitter looking even more expensive than it was then. Its closing price on Tuesday was 40 times its expected profit next year.
A contract is a contract, and the Delaware court where Twitter sued Musk has a solid track record of enforcing them (the litigation was suspended until November to allow the parties to finalize the deal). Thus, the banks united under the auspices of Morgan Stanley (NYSE:MS) to lend Musk $13 billion for the deal are unlikely to come to the rescue, although they are in for huge losses when it comes time to look for buyers for bonds that will pay the maximum 11.75% in a world where even safe interest rates are skyrocketing. Over the past 4 quarters, Twitter has lost $1 billion, so where to get the money to pay off the debt remains a mystery.
The chances that Twitter’s creditors will have to convert their bonds into shares are shrinking by the day. But the buyout business is competitive, and the reputational damage to any of the banks that default on their funding commitments to the deal will outweigh any money they can save in the short term by pulling out of the deal.
So if business sense does not save Musk, he will have to seek salvation in another direction. The only real direction is politics.
There are many possible ways for Washington to intervene. Many would clearly not want Musk, who is currently still the richest person in the world, to own a platform with such wide reach. Some on the left clearly do not want him to use such a powerful media tool ahead of and after the November elections.