Elon Musk seeks investors for Twitter

Published 18 Dec 2022 at 20:00Updated 18 Dec. 2022 at 20:08

Capital changes in sight at Twitter? Two months after buying the social network for $44 billion, Elon Musk is seeking to raise funds from investors, American media outlet Semafor reported over the weekend. Several investors have been contacted by Jared Birchall, CEO of the “family office” that manages Elon Musk’s fortune.

According to Semafor, Elon Musk could issue new Twitter shares and sell them for $54.20 per share – exactly the price the billionaire paid when he bought the platform in the fall. According to the pitch document, the fundraising should take place “before the end of the year”. Elon Musk’s team reportedly launched the project after receiving “many” expressions of interest.

Among the targets being approached, for example, is Ross Gerber, CEO of investment bank Gerber Kawasaki ($1.7 billion in assets under management). The investor had already bet $1 million when Elon Musk took over Twitter. According to Semafor, Ross Gerber has not ruled out participating in a new round of financing, depending on the plan presented by Musk.

Massive loss of revenue

This fundraising comes after major operational changes at Twitter. Since his arrival at the helm, Elon Musk has thanked the management team, laid off half of the workforce worldwide and relaunched the paid formula Twitter Blue. On the content front, Tesla’s boss has also set himself up as moderator-in-chief with arbitrary decisions, far from the standards of moderation generally applied by social networks.

This week, his decision to arbitrarily block a dozen journalists whom he accused of endangering his family led to the lifting of condemnations from the United Nations to the European Union, pending re-approval. However, these changes have scared away advertisers, who fund 90% of Twitter through digital advertising. In recent weeks, Elon Musk himself had acknowledged that the platform had “a massive loss” of income, as it was already fragile before the billionaire’s takeover.

A debt of 25 billion dollars

In this context, Elon Musk needs new money to be able to finance his future projects for Twitter. But this fundraising will also help him reduce his debt and pay the interest. To buy Twitter, the businessman had to take on a debt of 25.5 billion dollars – half of which was secured by Tesla shares.

But in the meantime, the rise in rates and the flight of advertisers have created additional financial pressure, forcing Elon Musk to sell some of his Tesla shares. Since the start of the year, the businessman has sold $40 billion worth of Tesla stock – including $3.6 billion again this week.

Now it remains to be seen which investors will participate in the round. Elon Musk admitted to “overpaying” Twitter, but he’s now offering them to invest at the same price as him… The advertisers’ flight isn’t helping either. However, Elon Musk can count on support from the big tech bosses in Silicon Valley, from Mark Zuckerberg (Meta) to Reed Hastings (Netflix). Larry Ellison, the head of Oracle software, had thus brought him 1 billion during the takeover of Twitter.

Prohibition on posting links to competing social networks

Twitter users will no longer be allowed to post links to several competing social networks, the platform announced in a statement on Sunday.

“Twitter no longer allows free promotion of certain social networks on Twitter,” the statement said, noting that Facebook, Instagram, Mastodon, Truth Social, Tribel, Post and Nostr are affected, as well as “links to social network aggregators social media such as linktr.ee, lnk.bio”.

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