Extra Funding
Day by day, Elon Musk continues to build his case for why he should own Twitter. As we’ve talked about before, the most questionable part of his takeover bid is the funding aspect due to how risky it is. He is essentially binding Tesla and Twitter’s future together, adding unnecessary stress to what is already a very volatile stock. Tesla is also going to see Musk sell shares in order to keep this effort afloat, but as we mentioned before the world is not going to allow Tesla to fail, and Musk is trying his best to keep both afloat.
These efforts have led to new funding plans that seem a bit more logical. Musk has gathered a group of investors who are offering $7 billion as part of Musk’s bid for Twitter. These 19 investors will reduce the load of risk on Musk’s end, and some big names lie in these 19 brave souls. The biggest investor is Prince al-Waleed bin Talal of Saudi Arabia, who’s stake is worth almost $2 billion, and that is followed by Larry Ellison, who is pitching in $1 billion. Venture firms are part of this bloc, and it’s as if they are repaying Musk due to Tesla delivering large gains to these groups. This goes to show Musk’s great networking in the industry, with only a few of these firms having confidence in the success of Twitter. With this new funding, Musk’s loan will decrease from $12.5 billion to $6.25 billion, and he will be able to finance the purchase with more equity and cash. Musk’s Tesla share collateral will also decrease from $62.5 billion to $31.25 billion, which is a major improvement for Tesla investors who were worried.
I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.
