Highlight: "Markets in Review" Issue #2

In other news, Musk tells advertisers to F* themselves

On Wednesday, tech billionaire Elon Musk, was hosted by Andrew Sorkin at The New York Times headquarters, as part of the yearly DealBook conference. Musk, the new proud owner of what was known as Twitter Inc., kindly told advertisers to go f* themselves. With the value of Twitter dropping from $44 billion to $19 billion, one might wonder why the CEO of a company, whose main source of revenue is advertising, may want to push the lifeline of his company away.

Context may give us an insight into this aberrant response. Sorkin had asked Musk if his recent visit to the Middle East was a media stunt, to remedy antisemitic allegations against his platform. Musk’s response was to deflect, a strategy he often used when cornered by journalists or critics.

It is important to note, that Musk had to borrow $12.5 billion from different Banks in order to afford purchasing Twitter. This margin loan was only possible for him to obtain, when he agreed to pledge 73.5 million shares of his other company, Tesla Inc., as collateral to the loan. This means that fluctuations in Tesla stock can affect Twitter’s interest expense, but also Musk’s ownership of Tesla. If Tesla’s stock price reaches a certain lower threshold, the Banks can call upon Musk’s shares in Tesla, and likely sell Twitter to the highest bidder.

This Wednesday marked another instance of Musk’s inability to manage the pressures associated with his risky deal-making. If he continues on this trajectory, we might not only see Twitter’s/X’s revenue collapse further, but we might also witness a future where Musk is no longer running nor owning Tesla.

You can read more about this story in Richard Currie’s article in The Register.

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