4 data you must know to understand the purchase of Twitter

There has perhaps never been a corporate takeover as controversial as Elon Musk’s acquisition of Twitter recently. The self-proclaimed “meme-lord” began by secretly buying up Twitter stock before making an offer in April 2022. Musk tried to back out of the deal before being faced with a court battle to force the purchase.

Key to understanding the purchase of Twitter

Below are four different tidbits on the Twitter deal to help understand its implications for users, investors, Elon, and Elon’s other businesses.

$46.5 billion financing deal

The deal that Elon struck was to pay $33.5 billion in equity commitments, $13 billion in commitments from bank loans. This financing deal inevitably raises new corporate debt for Twitter by $13 billion.

What the analysts think

The controversy continues amongst the experts, unsurprisingly. When looking to hire a technology speaker, the pool of talent is usually not just a world of experience within tech, but a willingness to be brutally honest about their observations within it. Popular orator Scott Galloway, for example, recently claimed that corporations and the super-rich need to be controlled more, and Elon amassing such power is a threat to society; a “false flag of free speech”, as he puts it. It’s possible to book Scott Galloway as a speaker for more insights on the Twitter deal, as Dan Milmo believes it’s his “least bad option”.

Twitter’s over-leveraged debt

Twitter’s balance sheet isn’t the healthiest. Their credit rating is already below investment grade, to which it’s now even worse. As of 2020, Twitter’s long-term debt was $2.55 billion whilst its current debt was just under $1 billion. In a time of rising interest rates, this could pose expensive, particularly for a company that hasn’t made a profit in 8 out of the last 10 years.

Elon becomes CEO and begins laying off staff

Up until a few days ago, nobody knew who Elon would appoint as CEO. It turns out that he appointed himself, of course. Elon already runs four other companies, making Twitter his fifth. Elon perhaps wanted the ability to be hands-on for a few reasons. The most immediate has been because he’s fired many of the top executives, as well as ordered Twitter employees to work longer hours. It has been reported that Elon plans to rid 75% of total staff to disrupt each aspect of how Twitter operates.

What does the future of Twitter look like?

It appears that whilst reluctant to go through with the Twitter purchase, Elon has now accepted the deal is happening and thrown himself in charge. Many believe that Elon’s goal will be to monetize the platform beyond just adds, as he has already suggested that verified users pay $20 per month for their blue tick – an idea quickly shot down by users. But, we are yet to see if Elon will push free speech and allow the return of right-wing banned users like Donald Trump, or, if he decides that the headache of advertisers leaving the platform is too great of a cost. What we do know, though, is that SpaceX and Tesla are his true babies, and Twitter will likely be to serve those needs first and foremost.