Will Tesla Face the Same Fate as Twitter?

Before Musk took control, Twitter was far from ideal, but it wasn’t in financial trouble either. The management has been looking at headcount reductions to restore slender profitability while it sought methods to raise sales since revenue growth was solid but declining. normal things.
After Musk took charge, that changed in an instant. He fired Twitter’s executive team and board of directors. After declining Musk’s hardcore ultimatum, the majority of Twitter’s workers and contractors have been let go or resigned their jobs. The few people still working for Twitter are fighting to keep the infrastructure from going down. Even worse, a surprising number of sponsors are leaving Twitter because of the rise of hate speech and false information there. Musk’s spur-of-the-moment plans to make more money have failed or been ruled too dangerous in the past. Musk also used up all of Twitter’s cash reserves when he bought the company. This is the cause of all of these financial problems.Musk pieced together his funding for Twitter primarily by offloading a sizeable portion of his Tesla stock and taking out a sizable loan. Due to this strategy, the social media corporation has little to no cash reserves left over to support its recovery. Whatever was left of the $6 billion in cash Twitter reported at the end of June was used to retire the company’s $5.29 billion in outstanding bonds. Twitter used the $42 billion it received from the deal to buy back and retire its stock. Twitter is deeply in the red as its cash circles the drain after adding the $13 billion in pricey new debt and the roughly $1.29 billion in annual interest costs that Musk’s leveraged buyout saddled the company with.Twitter will probably need a lot of money for a while as it tries to get back on its feet after having to pay severance to thousands of fired employees and hire new ones. It will also have to pay more for the collateral damage that Musk is causing, while also trying to stop the alarming loss of advertising revenue that Musk is helping to cause. Musk has cut ties with people who might have been able to help Twitter deal with the growing pressure on its liquidity. For instance, Musk’s lenders are unlikely to be eager to provide Twitter another loan. After skyrocketing interest rates and Twitter’s dismal financial prospects under Musk destroyed the market appeal of the planned bonds negotiated to fund the acquisition, they are already facing losses of more than $500 million on the loans they secured back in April.Additionally, the investors who provided money to help Elon acquire Twitter may have lost all of the value of their ownership because Twitter’s LBO debt is only worth 50 to 60 cents on the dollar. For Musk’s fellow equity owners, whom he even admitted obviously paying too much for in the first place, this is very bad news. Since Musk owns the majority of the company, as they should have anticipated going in, and has fired everyone with significant authority to challenge him, they have few options.Of course, Musk has the option to sell more of his precious Tesla stock to continue supporting the business. He recently sold an additional $4 billion worth of shares, ostensibly to save Twitter. This may be true, but the amount also matches the loss I calculated he had on his own margin loans since Tesla’s shares have dropped 49% since the company’s last proxy filing on March 31. After spending $44 billion on the most expensive impulse buy in history, Musk has fewer ways to keep Twitter going. Given his past performance, there is a good chance that he will rely on Tesla, his wealthiest business.Whatu2019s the future of Tesla? Share your thoughts in the comments.