Elon Musk successfully purchased Twitter for $44 billion. He put up $21 billion of equity while debt comprised the remaining sum. This is probably definitely the biggest LBO in recent history; as big as KKR’s takeover of TXU at $44 billion in 2007. Netflix is probably eyeing the deal too, hoping to get material for their next special, “Poison Pill” or “Love me Tender” or whatever sounds cool.
Sure, Musk is a billionaire and can do whatever he pleases with his money (and other people’s, if they trust him enough). That’s the beauty of financial markets; otherwise even peasants like me won’t be able to impulse-buy giant bags of Lucky Charms marshmallows online. But it’s quite concerning that another ultra-wealthy investor now owns one of the biggest social media networks.
Musk now joins the ranks of Zuckerberg, Murdoch, and other media moguls. He can also add “owning Twitter” to his bucket list after “creating SpaceX” and “dating Grimes.” We know that wealth and power tend to be concentrated in the same hands. This is just another rub in our faces that yes, that’s true. Let’s see if Musk delivers on his promises to uphold free speech and improve Twitter’s user features, though “free speech” is a malleable and occasionally dangerous concept.
Fundamentally, are Musk’s intentions really noble? He wrote that he isn’t in it for “the economics”. Twitter stock languished below $40 for much of this year and was slapped with losses in 2020 and 2021, though they seem to have decent cash flows and working capital in that time period. If Musk can turn the company around and garner sufficient investor confidence, then he could make a tidy little profit on exit. After all, a big part of finance is doing enough work to find the next willing and able buyer for one’s venture.
But I suspect he’s really in it because of his ideals around free speech and to some extent, just because he can. For an idiosyncratic public figure that has ample stuff for ten lifetimes, it would be weird to buy Twitter solely for a profit opportunity and inherit all the gnarly controversies along with it. I’ll end this stream of consciousness with my go-to quote when I have nothing else to say and want to seem smart – “It’s too early to tell” said by Zhou Enlai.
