Looking for more investors to ‘obviously’ overpay
Lately, I’ve been thinking a lot about that time when Elon Musk bought a McLaren F1 for $1 million and then immediately drove it into a ditch while trying to show off to Peter Thiel. “You know, I had read all those stories about people who made money and bought sports cars and crashed them,” Musk said to Thiel, according to Max Chafkin’s The Contrarian. “But I knew it could never happen to me, so I didn’t get any insurance.”
Anyway, according to Semafor, Musk is trying to get more investors for Twitter at the original $54.20 per share price he bought the company at before he frightened away advertisers and banned a bunch of journalists.
About that price — remember how Musk decided actually buying Twitter at $54.20 was a bad idea and tried to back out of the deal? Anyone remember that? He accused Twitter of making “false and misleading” statements during their negotiations and tried to cancel the deal. There was a flimsy pretext of bots involved, but it eventually became clear none of that was going to fly, and Musk eventually closed on Twitter, with no concessions whatsoever, at the end of October.
No? Okay, maybe this will ring a bell: Tesla’s third quarter earnings call, remember that? The one where Musk said he and other investors were “obviously overpaying for Twitter right now?” He’s, um, looking for more investors to overpay, I guess.
Tesla investor Ross Gerber is on the record in the Semafor story, saying he was contacted yesterday about another funding round — he’d already dropped some nonzero but less than $1 million amount on Twitter. Gerber, you will be pleased to know, is considering this generous offer to put more money into an asset the owner has himself said is overpriced. “One could argue he has created value or destroyed value at Twitter,” Gerber told Semafor. “It’s hard to tell at this point.”
I feel? Like I am losing my mind? And somehow Semafor’s format doesn’t help because we get “Liz’s view,” which begins:
Asking investors to pay full price for an asset whose value is rapidly collapsing is going to be a tough sell. Musk may have ideas that will save Twitter and clean up social media, but he’s running out of runway to do it.
I am so glad Semafor’s signature formula has broken that out specifically so I can contemplate it. Let me do my own version.
Man, look, after the debacle on Twitter Spaces last night, can we please stop pretending that this is anything but flailing? He’s crashed the McLaren, and there’s no insurance.
Musk has been offloading a bunch of his Tesla shares, which might mean he’s planning to buy or personally pay Twitter’s debt or might mean he’s getting margin called on some of his loans as the price of Tesla shares falls.
It’s probably smarter for him to buy some of Twitter’s debt, which his banks are preparing to write down losses on. But there’s no denying Twitter’s in such dire financial straits that Musk has taken such innovative steps as no longer paying rent on some of Twitter’s office space and stiffing vendors.
Some of you people just aren’t ready for normal interest rate environments.
Correction 6:03PM ET: Musk has been offloading Tesla shares, not Twitter shares. We regret the error.