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Elon Musk’s first week as the owner of Twitter was what you’d expect from a billionaire not known for his impulse control: borderline pandemonium. But while Musk’s loudmouth antics gobble up the headlines, the banks who financed the deal are suffering quietly, for now.
The Financial Times reported Tuesday that the banks who agreed to back Musk’s acquisition are planning to hold the $12.7 billion in debt that they lent to the Tesla founder until next year. The banks are reportedly waiting on one of two things: the markets to stabilize or Musk to come up with a clear business plan. Seems like they might want to hold out for option three…
A Bird In The Hand…
It might feel like eons ago, but Musk first declared his interest to buy Twitter in April. A group of banks led by Morgan Stanley quickly hopped onto the $44 billion deal, just a month before the economy started to ride the mudslide it’s on now. Tech stocks, including Twitter’s, tanked, making the debt much less valuable than it had been when the banks signed on. The banks also had to endure the melodrama of Musk threatening to abandon the deal and then Twitter suing him for it. Now that Musk and his bluebird have finally tied the knot, his financiers are staring down a $1 billion loss, or more.
Musk made big promises when he was shopping for capital, pledging to quintuple the platform’s revenue to $26.4 billion by 2028. He’s already making moves, but they’re not exactly unambiguous:
- News got out this week that Musk wants to jack up the price of premium subscription service Twitter Blue from anywhere up to $20 per month, and make it mandatory for verified users who want to hold onto their blue checkmarks. After publicly haggling with disgruntled horror writer Stephen King, Musk settled on a price of $8, and announced the subscription would come with some small perks beyond a blue-check status symbol.
- Another way Musk can save money is by laying off staff and the question now isn’t “if” but “how many?” The Washington Post reported in October he planned cuts of 75% meaning Twitter’s 7,500 employees have been waiting for the ax to fall for weeks now, but Musk told staff this figure was wrong, according to a recent Bloomberg report. He’s already taken a scorched earth approach to the C Suite, firing CEO Parag Agrawal and dissolving Twitter’s board of directors on Monday.
In Other Musk News: While staff at Twitter brace for job cuts, Elon’s other workers at Tesla’s Fremont, California factory might see some new faces popping up. Bloomberg reports Tesla is sending around 200 workers from its Shanghai factory to help expand Fremont. Guess you could say they’ve been… shanghaied.