Will Elon Musk sell TSLA after publishing his Q4 2022 report today?
When I decided to write this, it wasn't about his “promise” to be made on December 22, 2022 (see below); he said (he did not promise) no longer to sell $Tesla(TSLA.US$ Shares in the near future.
People only need to do a Google search to find out how many times Musk has broken his promises.
“Promises” cost a dime a dozen, right? oops -- haha!
Now that Tesla's earnings results for the fourth quarter of 2022 are about to be announced, the closing time is January 25, 2023 (Wednesday); the troubling question is “will Mr. Musk continue to “quietly” sell more Tesla shares later?
Note: Mr. Musk will not violate the rules of the US Securities and Exchange Commission. It stipulates that he should file 13D within 10 days to disclose his sell-off (if any).
When talking about Musk's further purchase of Twitter stock on March 14, 2022, he did so again without filing 13D until 21 days later.
Why is it suspected Musk will sell more TSLA shares?
1) The first interest on the $13 billion Twitter loan matures
Precursors: Please read the article linked above to form your own good opinion first. Thank you.
Let's say the purchase “officially” happened in October 2022
Assuming interest is paid every 3 months
Of the $44 billion that bought 100% of Twitter, $13 billion was borrowed
Let's say the interest rate is 4.5% per year.
Using a simple 3-month interest calculation method, the calculated interest was $146 million (approximately). Logically, it should be more, since the interest on loans is usually higher.
2) Continuation & new lawsuit filed by former Twitter employee
Assuming interest is paid every 3 months
Of the $44 billion that bought 100% of Twitter, $13 billion was borrowed
Let's say the interest rate is 4.5% per year.
Using a simple 3-month interest calculation method, the calculated interest was $146 million (approximately). Logically, it should be more, since the interest on loans is usually higher.
2) Continuation & new lawsuit filed by former Twitter employee
How likely is Musk's legal team to win existing and emerging lawsuits; because every country where Twitter is based doesn't abide by labor laws?
If he loses his lawsuit, will he face another hefty fine against Twitter?
3) More layoffs, more severance pay
If he loses his lawsuit, will he face another hefty fine against Twitter?
3) More layoffs, more severance pay
On January 21, 2023 (Saturday), Musk tweeted against the US Consumer News and Business Channel report that there were only 1,300 employees left.
He said (no evidence, just his words) that of the original 7,500 staff, 2,300 (30.57%) were still there.
As every batch of employees gets laid off, Twitter is required to pay severance payments in advance.
This meant more cash “flowed” out of the treasury.
4) Reduced revenue from Twitter advertisers
He said (no evidence, just his words) that of the original 7,500 staff, 2,300 (30.57%) were still there.
As every batch of employees gets laid off, Twitter is required to pay severance payments in advance.
This meant more cash “flowed” out of the treasury.
4) Reduced revenue from Twitter advertisers
Twitter has enjoyed “healthy” ad revenue in the past, reaching almost $1.6 billion and was alone in the fourth quarter of 2021 (see chart above).
Even before Q2 2022, its revenue was close to $1.2 billion.
However, that is a thing of the past. Its history is now.
https://www.reuters.com/technology/heres-what-twitter-lost-advertising-revenue-final-months-2022-2023-01-19/
Even before Q2 2022, its revenue was close to $1.2 billion.
However, that is a thing of the past. Its history is now.
https://www.reuters.com/technology/heres-what-twitter-lost-advertising-revenue-final-months-2022-2023-01-19/
Original documents - https://www.reuters.com/technology/heres-what-twitter-lost-advertising-revenue-final-months-2022-2023-01-19/
Precursors - Please read the article linked above and form your own opinion first. Thank you.
Since the acquisition in October 2022, 14 of the top 30 advertisers have stopped advertising 100%.
There was a decline in 4 advertisers in the top 30, with Twitter ads of 92% to 98.7% in the middle.
Overall, the top 30 advertisers spent — 42% less Twitter after the acquisition.
It looks like Twitter is like Tesla's Giga factory in Germany — a huge melting pot of burning resources, like there's no tomorrow.
5) Twitter's shrinking customer base
Precursors - Please read the article linked above and form your own opinion first. Thank you.
Since the acquisition in October 2022, 14 of the top 30 advertisers have stopped advertising 100%.
There was a decline in 4 advertisers in the top 30, with Twitter ads of 92% to 98.7% in the middle.
Overall, the top 30 advertisers spent — 42% less Twitter after the acquisition.
It looks like Twitter is like Tesla's Giga factory in Germany — a huge melting pot of burning resources, like there's no tomorrow.
5) Twitter's shrinking customer base
Twitter Member Base - Forecast
Take a look at Statista's predictions that Twitter will lose 14.5 million members by 2023.
Twitter will lose another 18.2 million members
Over a period of more than two years, it is estimated that 32.7 million members will be lost.
If this prediction is accurate, does it make sense as an advertiser — to continue advertising on a platform that is rapidly becoming “less popular”?
Would it be “better” for an advertiser to advertise on a platform where the membership base “grows” rather than “sunsets”?
Twitter will lose another 18.2 million members
Over a period of more than two years, it is estimated that 32.7 million members will be lost.
If this prediction is accurate, does it make sense as an advertiser — to continue advertising on a platform that is rapidly becoming “less popular”?
Would it be “better” for an advertiser to advertise on a platform where the membership base “grows” rather than “sunsets”?
What might happen now?
Fact: The debt is held by Twitter, not Musk personally. Twitter is being asked to repay interest of around $1.5 billion a year, according to the Financial Times
If Twitter fails to pay this amount, its management may file for bankruptcy to commence debt restructuring proceedings.
If you file for bankruptcy, will this drive the remaining advertisers to “flee” and further evaporate the remaining zero revenue?
Musk estimates that he owns 79% of Twitter's shares, and the consequences will be immediate. Serious.
Alternatively, Twitter could use its limited cash reserves to pay off debt. How many more quarters of this situation will continue before this well dries up?
Finally, Musk can sell him more Tesla shares and has already sold nearly $40 billion to help finance the purchase deal.
What better time than after the financial results for the third quarter of 2022?
Look at all his previous Tesla stock sales; he always managed to sell them when Tesla's stock was at the “high end” of the price range. He always seizes the timing of the sell-off, agree?
Will this time be any different?
If Twitter fails to pay this amount, its management may file for bankruptcy to commence debt restructuring proceedings.
If you file for bankruptcy, will this drive the remaining advertisers to “flee” and further evaporate the remaining zero revenue?
Musk estimates that he owns 79% of Twitter's shares, and the consequences will be immediate. Serious.
Alternatively, Twitter could use its limited cash reserves to pay off debt. How many more quarters of this situation will continue before this well dries up?
Finally, Musk can sell him more Tesla shares and has already sold nearly $40 billion to help finance the purchase deal.
What better time than after the financial results for the third quarter of 2022?
Look at all his previous Tesla stock sales; he always managed to sell them when Tesla's stock was at the “high end” of the price range. He always seizes the timing of the sell-off, agree?
Will this time be any different?
Do you think Mr Musk will allow Twitter to file for bankruptcy; considering all the possible repercussions?
Do you think Musk will sell his Tesla stock to fund Twitter's operations?
Do you think Musk will sell his Tesla stock to fund Twitter's operations?
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