How The Bird Was Sold

August 16, 2023 8:02 AM

It's been long known that the purchase of Twitter, while primarily funded by Elon Musk, was done through a consortium of investors. In a piece by the Washington Post, they pull back the curtains on who's in that group. (Alternate link)

Some are already known (the House of Saud), others are unsurprising (private equity, crypto exchange Binance), and some are eye-opening (Jack Dorsey).

posted by NoxAeternum (23 comments total)

[December 2022]
posted by constraint at 8:04 AM on August 16, 2023 [5 favorites]

How much value has been destroyed so far? It couldn't have happened to a nicer passel of guys.

[Nelson laugh]
posted by chavenet at 8:07 AM on August 16, 2023 [13 favorites]

Conspicuously missing from the breakdown is any discussion of the kind of investment each made. Jack Dorsey's $1B is a goner, I think--he's riding that elevator to the sub-basement. But I'm pretty sure the big one, $13B from a consortium of banks, is actual debt and not equity, so no matter how low it goes, they still want their money, or at least their interest, until X hits zero and they have to write off the whole thing. This is nothing but informed speculation, though, and I'd really like to see a more in-depth piece on this.
posted by fatbird at 8:16 AM on August 16, 2023 [4 favorites]

Could Dorsey be pre-positioning to take over again when Twitter hits rock-bottom, as a vanity/revival project? It's got to be play money from his point of view (he's wealthy enough he never needs to work another day in his life) and when Musk finishes humping the corpse Dorsey might look like a safe pair of hands to handle waste disposal/merger with Bluesky or something.
posted by cstross at 8:33 AM on August 16, 2023 [10 favorites]

Meanwhile the jackassery continues: Elon Musk’s X is throttling traffic to websites he dislikes(archive)
posted by mcstayinskool at 8:46 AM on August 16, 2023 [8 favorites]

What fatbird said. Musk has them over a barrel. He is driving down revenue so he can legitimately tell the banks that he cannot pay. Then, he will offer a pennies on the dollar to buy the debt. He has to ensure, in the meanwhile, that the value that he does add to twitter is not enough for some hedge fund boys to swoop in and bid .13 per share vs. his .12 per share offer to the banks (I'm making up those numbers). The banks also don't want to lose the Musk brands money. So, they are going to have fight off higher bidders, and bank shareholders concurrently to keep the Musk brand money in-bank.

The best part is watching Musk heap shit into this barrel of weasels and the worst part is the obvious creep of authoritarian corporatist pseudo-governmental agents make life a few degrees worse for everybody.
posted by zerobyproxy at 8:47 AM on August 16, 2023 [7 favorites]

The article has a section for "What they get" for certain backers but not others, so I'll take this chance to air my strong belief that many individual investors and probably a healthy portion of banks bought into this deal because they saw the Arab Spring self-organize on Twitter and wanted to eliminate the possibility of that happening again, and the easiest way to do that if you have stupid amounts of money is to just buy the platform.

Because of this I think it's not an entirely accurate read to look at twitter as an investment where the investors expect to recoup any of their cash in profits eventually; for a significant chunk of investors (and I'd bet Elmo knows the cash value of this investment bloc to the dollar) they get just as much ROI if Twitter dies as if it turns a profit. This is win/win for Musk, because he serves his investors' interests just as much by fucking up the company as he does by being a good steward.
posted by Pickman's Next Top Model at 8:50 AM on August 16, 2023 [28 favorites]

Quick googling shows that Twitter has $6.5 billion and $3 billion in loans at 4.75% and 6.75% respectively, plus the overnight rate. The overnight rate bit is important. It's now over 5% (vs 2% a year ago), meaning Twitter is paying over $1 billion in interest. (Twitter's most profitable year ever had $1.4 billion in earnings).
posted by justkevin at 8:54 AM on August 16, 2023 [6 favorites]

But I'm pretty sure the big one, $13B from a consortium of banks, is actual debt and not equity

Cannot say for sure, of course, but this is initial funding, so these were probably syndicated loans, or at least loans that were intended to be syndicated. In other words, this debt may now be held by a number of other institutions.
posted by praemunire at 9:12 AM on August 16, 2023 [1 favorite]

> informed speculation

I see what you did there.
posted by kristi at 9:43 AM on August 16, 2023

I would be shocked if any institutional investor failed to require that Musk put up his Tesla stock as collateral. Probably with trigger points for calling the loan in based on the value of that stock.

So if weird things start happening with Tesla stock, we’ll know it’s about to hit the fan.
posted by jamjam at 9:55 AM on August 16, 2023 [4 favorites]

As the article notes the bank loans were secured with his Tesla stock as collateral, the banks are not going to renegotiate shit. If Twitter can't pay the interest on those loans BOA and Morgan Stanley will start taking his shares or his cash. Also given that Tesla stock has fallen he's probably on the hook to true up his collateral, or they will start dumping his stock.
posted by interogative mood at 10:47 AM on August 16, 2023 [9 favorites]

the banks are not going to renegotiate shit.

But isn't there some old saying about how if you owe the bank $100 it owns you, but if you owe the bank $100 million you own the bank?
posted by clawsoon at 10:54 AM on August 16, 2023

I mean, it's pretty obvious that destroying this channel of communication was always the goal.

The people behind it are no surprise at all.
posted by yellowcandy at 11:14 AM on August 16, 2023 [11 favorites]

Never attribute to malice that which is adequately explained by stupidity ~ Hanlon's razor
posted by Lanark at 11:42 AM on August 16, 2023 [4 favorites]

Never attribute to malice that which is adequately explained by stupidity

Why not both?
posted by Sauce Trough at 1:27 PM on August 16, 2023 [8 favorites]

Clarke's implied corollary to Hanlon's razor* obtains here though.

*"Sufficiently advanced stupidity is indistinguishable from malice."
posted by Pickman's Next Top Model at 2:30 PM on August 16, 2023 [16 favorites]

And apparently, any stupidity which is distinguishable from malice is insufficiently advanced.
posted by JohnFromGR at 2:34 AM on August 17, 2023 [1 favorite]

But isn't there some old saying about how if you owe the bank $100 it owns you, but if you owe the bank $100 million you own the bank?

Owning a chunk of a $6 billion company changes the sums somewhat.
posted by onya at 9:26 PM on August 17, 2023

"Block is going to be deleted as a 'feature,' except for DMs," declares Elon Musk, owner of the former #Twitter platform. "It makes no sense."

That should degrade things considerably.
posted by Artw at 9:37 AM on August 18, 2023 [2 favorites]

“So Elon Musk is Getting Rid of the Block Button,” Kelly Hayes, Kelly's Substack, 18 August 2023

As I have discussed on Movement Memos, Musk did not buy Twitter for the sake of financial gain. His purchase of the company was an ideological maneuver, aimed at disempowering so-called “woke” voices. The billionaire has long asserted that the “woke mind virus” is a threat to civilization—by which he means, a threat to his late capitalist, longtermist agenda. But Musk’s takeover of Twitter has been a comedy of errors. In addition to stigmatizing blue check verification, Musk has gutted the identity of a trusted brand, and also failed to disempower the communities he loathes.

posted by ob1quixote at 10:24 AM on August 18, 2023 [1 favorite]

As Mefite jeffk noted on Mastodon, Apple's App Store Guidelines:
> To prevent abuse, apps with user-generated content or social networking services must include:
> The ability to block abusive users from the service
posted by Pronoiac at 10:41 AM on August 18, 2023 [3 favorites]

Genuinely surprised by Dorsey -- not because I thought he was a good guy, but because he is not nearly as rich as other well-known "founders." I assumed the reason he was so cheerful about the sale was the chance to unload his Twitter headache at a peak. With that in mind, not sure if anyone cares for an invite to buggy bluesky (it grinds to a halt whenever Musk does something silly at X), I have a couple to spare. I guess just let me know and I can MeMail? (Sorry, not trying to pump up another sketchy social media site but it feels weird to have spare invites when Twitter is getting rid of the ability to block people, for Christ's sake.)
posted by grandiloquiet at 11:51 AM on August 18, 2023