Twitter, as we knew it, is dead. Elon Musk made sure of that when he agreed the $44bn acquisition. The incorrigible provocateur has until now escaped accountability for his eccentricities by making enough electric cars to please Wall Street. Shares in Tesla have fallen 65 per cent over 2022 amid a broad tech stock sell-off. High debt costs mean an Ebenezer Scrooge-like reinvention might be the trick for Musk’s revival.
Musk’s erratic leadership of the social media app has not been comforting. See the sudden ejection of staff and messy implementation of a new model to verify users. Twitter is bleeding advertisers and advertising revenue. With annual interest expense from debt topping $1bn, Musk himself has floated the idea of bankruptcy.
Worse for Musk is that he was forced to sell billions in Tesla shares amid the stock’s rout in order to help fund the Twitter acquisition. For now the enterprise value of Twitter may be less than the $13bn of debt it carries. Banks have not been able to sell that debt into the market yet.
The multi-billionaire admits that things are tough. The manager of a social media site must ultimately co-operate with regulators and win the trust of users and marketers.
The key New Year resolution Lex prescribes for Musk is to acknowledge that Twitter’s previous management, who he lambasted while trying to escape the buyout, seemed to know at least how to run the service. Humility would be a good look. So would an admission that he needs help.
There is also the matter of Twitter creditors. At present, several Wall Street banks hold the buyout debt on their respective balance sheets. Musk should also resolve to negotiate a deal to retire it at a discount.
Investors and media venerate winners, even those whose character flaws are on show. America likes a good comeback story too. Musk has his back to the wall with his usual defiance. For his new profile, something more conciliatory is in order.
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