Elon Musk’s Twitter Pitch Featured Jobs and Cost Savings, Ways to Make Money: Report

Elon Musk's Twitter pitch featured jobs and cost savings, ways to make money

Elon Musk made the pitch to the lenders as he tried to get into debt for the buyout.

Elon Musk told banks that agreed to help fund his $44 billion acquisition of Twitter Inc that he could crack down on executive pay at the social media company in an effort to cut costs, and develop new ways to monetize tweets, three acquaintances with the case said.

Musk made the pitch to the lenders as he tried to run into debt for the buyout days after submitting his bid on Twitter on April 14, the sources said. His filing of bank pledges on April 21 was key to Twitter’s board accepting its “best and final” offer.

Musk had to convince the banks that Twitter was generating enough cash flow to pay off the debt he sought. He ended up getting $13 billion in loans secured against Twitter and a $12.5 billion margin loan tied to his Tesla stock. He agreed to pay the rest of the fee with his own money.

Musk’s pitch to the banks formed his vision rather than firm commitments, the sources said, and the exact cost savings he will pursue once he owns Twitter remains unclear. The plan he outlined to banks was thin on details, the sources added.

Musk has tweeted about cutting Twitter executive salaries, which he says could lead to cost savings of about $3 million. Twitter’s share-based compensation for the 12 months ended Dec. 31, 2021 was $630 million, up 33% from 2020, company filings show.

In his pitch to the banks, Musk also pointed to Twitter’s gross margin, which is much lower than competitors such as Facebook and Pinterest from Meta Platform Inc.

The sources have asked for anonymity as the matter is confidential. A Musk representative declined to comment.

Bloomberg News reported earlier on Thursday that Musk specifically mentioned job cuts as part of his pitch to the banks. One of the sources said Musk will not make any job cuts until he takes ownership of the company later this year. He went through with the acquisition without having access to confidential details about the company’s financial performance and workforce.

Musk told the banks he also plans to develop features to grow company revenues, including new ways to monetize tweets containing important information or going viral, the sources said.

Ideas he put forward included charging a fee when a third-party website tries to quote or embed a tweet from verified individuals or organizations.

In a tweet he subsequently deleted earlier this month, Musk proposed a series of changes to the social media giant’s Twitter Blue premium subscription service, including lowering the price, banning ads and giving an option to pay. in the cryptocurrency dogecoin. Twitter’s premium Blue service now costs $2.99 ​​per month.

In another tweet he deleted, Musk said he wants to reduce Twitter’s reliance on ads for much of his revenue.

Musk, whose fortune is pegged at $246 billion by Forbes, has indicated that he will support the banks in marketing the syndicated debt to investors, and will then reveal more details about his business plan to Twitter, the sources said. .

Musk has also drafted a new chief executive for Twitter, one of the sources added, who has declined to name that person’s identity.

AT RISK TO SOME BANKS

The Tesla Inc CEO also told the banks that he will seek as liberal a policy as possible on the social media platform within the legal constraints of any jurisdiction Twitter operates, the sources said, a position Musk has publicly reiterated.

The $13 billion Twitter loan is equivalent to seven times Twitter’s projected profit in 2022 before interest, taxes, depreciation and amortization. This was too risky for some banks who decided to participate only in the margin lending, the sources said.

Another reason some banks are opting out is because they feared Musk’s unpredictability could lead to an exodus of talent from Twitter, which the sources say would hurt her business.

A Twitter spokesperson did not respond to a request for comment.

(Reporting by Krystal Hu in New York and Anirban Sen in Bengaluru; editing by Greg Roumeliotis and Sam Holmes)

(This story was not edited by NDTV staff and was generated automatically from a syndicated feed.)

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