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Zhengguan News Comprehensive Bloomberg reported on the 26th that Tesla CEO Elon Musk reached an agreement with Twitter on the 25th to acquire The social networking platform of Twitter for $44 billion. So the question is, how will Musk pay for the $21 billion stake in the deal, which he personally secured?
Screenshot of Bloomberg's report
Musk, 50, outlined $13 billion in bank financing under the twitter name, as well as $12.5 billion secured as part of his $170 billion stake in Tesla. But it's unclear how he will raise the rest.
According to the Bloomberg Billionaires Index, Musk is the richest man in the world, with a fortune worth $257 billion. However, Bloomberg estimates that the sum of his cash and liquid assets is only about $3 billion.
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This leaves him with few options:
Partnerships with other investors
For Musk, finding like-minded investors who share his vision for Twitter is one way to buy Twitter with him. This means that part of the equity will come from new or existing shareholders.
Musk has hinted that this is possible. After first proposing to buy Twitter, Musk said at an event that "the aim is to retain as many shareholders as the law allows." ”
The number of shareholders in U.S. private companies is usually no more than two thousand, meaning that most retail investors will not continue to hold shares in Twitter if the acquisition is completed.
But majority shareholders like Jack Dorsey, one of Twitter's founders, may choose to continue holding a stake in the company if they agree with Musk's vision. Dorsey's stake is worth nearly $1 billion. Bloomberg reported on the 25th that Musk is looking for equity partners and continues to negotiate with other potential co-investors.
But then again, Musk has said at previous events that he "doesn't care about the economy" and could scare off some potential investors.
"Tear down the east and make up for the west" to sell Tesla shares
Musk also has enough money to deal with it on his own, and the way to do it is to sell some of his stake in Tesla.
According to Tesla's closing price on the 25th, Musk will still have about $21.6 billion worth of unsecured Tesla stock after repaying a $12.5 billion margin loan with stock collateral. After tax, the proceeds from the sale of the stock will be close to his commitment.
But this approach also has its own risks. First, concerns about Musk's need to sell some of his shares may have dragged down Tesla's stock price. The share price has fallen about 8 percent since the beginning of the month.
In addition, selling shares in two other musk stocks, SpaceX and The Boring Company, is unlikely because they are much less liquid.
Sell cryptocurrencies held
Another possibility: Musk is richer than calculated by the Bloomberg Billionaires Index.
Musk's asset calculations are based on documents and news reports about publicly traded stocks, but private financial information about him is limited.
Musk said in July that he holds Bitcoin, Ether and Dogecoin. While it's unclear how much he holds and for how long, the first two cryptocurrencies have risen by about 720% and 2600%, respectively, since March 2020, well above the S&P 500's gain of about 90%. Meanwhile, after Musk acquired Twitter, Dogecoin surged nearly 30% on the 25th.