4 ms·

> But the real pressure for cost cutting and the layoffs is that Musk purchased Twitter via a leveraged buyout You think that if he paid completely up front he

> But the real pressure for cost cutting and the layoffs is that Musk purchased Twitter via a leveraged buyout You think that if he paid completely up front he wouldn't care about cutting costs? Why? The pressure would still be there -- it would just be in the form of pressure to recoup his investment

strangattractor 4y ago
What does a lender do when you can't pay a mortgage? They come and repossess your house. That is the situation he is in now. He realized that at the last minute when he tried to bail but gosh darn those pesky laws and contracts:)
a4isms 4y ago
I can't speak for why someone else thinks this, and I certainly cannot read his mind, so this is just a general comment about buying something with cash or equity versus debt. If you buy with debt, you have to pay every month (or year, or whatever). So obviously you have to either have deep pockets to pay out of pocket, or generate more cash flow, and you have to do it NOW, because the debt must be serviced now. If you buy with cash and/or equity, you take on an opportunity cost, but you can afford to make longer-term investments, and you can afford to take your time with cost-cutting or other measures. The pressure to recoup your investment is certainly there, but the urgency to generate cash-flow in the short term is not. --- All that being said, if Musk doesn't think Twitter investing in initiatives that will take a while to pay off, but he does think it needs short-term moves like firing everyone in sight and putting Trump back on the platform and getting rid of pesky "activists" who think "freedom of speech" includes telling advertisers that they face boycotts... Well then, debt is clearly the winning move.
- kgwgk 4y ago
  > The pressure to recoup your investment is certainly there, but the urgency to generate cash-flow in the short term is not. In addition to having to pay the interests on the debt usually you also need to keep some financial metrics within some predefined thresholds - facing penalties in case of breach.
- ben_w 4y ago
  > getting rid of pesky "activists" who think "freedom of speech" includes telling advertisers that they face boycotts... I've heard this taking point elsewhere. I wonder if he really believes that. I don't; in my experience, adverts have become far more obvious — and far more commonly self-advertisements, e.g. Duolingo advertising it's own paid features — over the course of this year. Feels like all businesses are pulling back on all their expenses, advertising included, at the same time, not mere activism.
  - deleted 4y ago
    [deleted]
csours 4y ago
The part that Musk personally paid isn't "cash", it's cash and loans against his Tesla shares. To the very rich, cash is terrible because of the tax obligations. That being said, the whole Musk Tax rigmarole [0] is funny to me for various reasons. Musk's stated reasoning here is not quite correct, and somewhat self serving; at the same time, I think many people would not be satisfied even if Musk was taxed at 100% of his net worth. 0. https://www.cnbc.com/2021/11/07/elon-musk-faces-a-15-billion-tax-bill-which-is-likely-the-real-reason-hes-selling-stock.html https://www.cnbc.com/2021/11/07/elon-musk-faces-a-15-billion...

strangattractor 4y ago

What does a lender do when you can't pay a mortgage? They come and repossess your house. That is the situation he is in now. He realized that at the last minute when he tried to bail but gosh darn those pesky laws and contracts:)

a4isms 4y ago

I can't speak for why someone else thinks this, and I certainly cannot read his mind, so this is just a general comment about buying something with cash or equity versus debt. If you buy with debt, you have to pay every month (or year, or whatever). So obviously you have to either have deep pockets to pay out of pocket, or generate more cash flow, and you have to do it NOW, because the debt must be serviced now. If you buy with cash and/or equity, you take on an opportunity cost, but you can afford to make longer-term investments, and you can afford to take your time with cost-cutting or other measures. The pressure to recoup your investment is certainly there, but the urgency to generate cash-flow in the short term is not. --- All that being said, if Musk doesn't think Twitter investing in initiatives that will take a while to pay off, but he does think it needs short-term moves like firing everyone in sight and putting Trump back on the platform and getting rid of pesky "activists" who think "freedom of speech" includes telling advertisers that they face boycotts... Well then, debt is clearly the winning move.

kgwgk 4y ago
> The pressure to recoup your investment is certainly there, but the urgency to generate cash-flow in the short term is not. In addition to having to pay the interests on the debt usually you also need to keep some financial metrics within some predefined thresholds - facing penalties in case of breach.
ben_w 4y ago
> getting rid of pesky "activists" who think "freedom of speech" includes telling advertisers that they face boycotts... I've heard this taking point elsewhere. I wonder if he really believes that. I don't; in my experience, adverts have become far more obvious — and far more commonly self-advertisements, e.g. Duolingo advertising it's own paid features — over the course of this year. Feels like all businesses are pulling back on all their expenses, advertising included, at the same time, not mere activism.
- deleted 4y ago
  [deleted]

csours 4y ago

The part that Musk personally paid isn't "cash", it's cash and loans against his Tesla shares. To the very rich, cash is terrible because of the tax obligations. That being said, the whole Musk Tax rigmarole [0] is funny to me for various reasons. Musk's stated reasoning here is not quite correct, and somewhat self serving; at the same time, I think many people would not be satisfied even if Musk was taxed at 100% of his net worth. 0. https://www.cnbc.com/2021/11/07/elon-musk-faces-a-15-billion-tax-bill-which-is-likely-the-real-reason-hes-selling-stock.html https://www.cnbc.com/2021/11/07/elon-musk-faces-a-15-billion...