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Buy a company for $44 Billion, and now offers equity at $20 Billion valuation? https://www.wsj.com/articles/twitter-offers-new-equity-grants-to-staff-938ee7f8

Buy a company for $44 Billion, and now offers equity at $20 Billion valuation? https://www.wsj.com/articles/twitter-offers-new-equity-grants-to-staff-938ee7f8 https://www.wsj.com/articles/twitter-offers-new-equity-grant... The company has lost over half its value in just 5 months.

misssocrates 4y ago
He overpaid and that was already well known before he even took the reigns.
- dragontamer 4y ago
  Overpaying by well over double is... a bad business decision. Is it not? Even as bad as the stock market was last year, very few companies lost 50%+ of their value. -------- There's a lot of other decisions that are very strange coming out of Tesla, such as the removal of RADAR and Ultrasonic Sensors. Does Elon Musk really believe he can compete against next-generation companies when he's removing sensors from his cars?
  - deleted 4y ago
    [deleted]
  - zaroth 4y ago
    Regarding the Tesla comments; Radar is back by the way, with an increased resolution that makes it more useful in highways where overhead signs false positive as a collision risk on the old sensor. The ultrasonic sensors IMO were basically worthless. Initial analysis of the new v4 FSD hardware indicates they are adding more cameras - including bumper cameras to cover blind spots that previously would have relied on ultrasonics. It doesn’t seem like HW4 can be retrofit like HW3 was, so it will be very interesting how that all plays out! https://www.teslarati.com/tesla-hardware-4-hd-radar-first-look-photos/ https://www.teslarati.com/tesla-hardware-4-hd-radar-first-lo... https://mobile.twitter.com/greentheonly/status/1625905220432671015 https://mobile.twitter.com/greentheonly/status/1625905220432...
prottog 4y ago
I mean, the Nasdaq 100 lost almost 30% in 3 months, from March to June of last year. Doesn't mean every CEO fumbled that bad. Or maybe it does!
- dragontamer 4y ago
  Elon needs to grow Twitter by 50% before he has 'only' a 30% loss. There is a huge difference between 55% drop that Mr Musk has experienced with Twitter, and the 30% drop you're talking about. EDIT: > from March to June of last year That seems like a weird comparison? An apples-to-apples benchmark would be the Nasdaq 100 from November last year (when Musk finished buying Twitter) to March this year.
coldcode 4y ago
It's not worth $20B, that's just his ego talking. I can see it being worth $4B. It has no long term path to any kind of high growth multiple. Twitter was always an amazingly useful concept but not a big money making business idea. At best it could become like a steady ultility company.
- dragontamer 4y ago
  I'm steelmanning my argument. But yes, you're right. I can't imagine a real VC firm buying Twitter today at $20+ B. Note that Twitter has a $13 Billion loan with $1.3 Billion/year in interest payments in a rising interest rate economy while VC banks like SIVB are failing. That means to buy Twitter at $20B valuation, the VC firm would need to spend $33 Billion. ($20 B valuation + $13 Billion loan) I honestly don't see this company having enough runway to even reach the $1.3 Billion/year interest payment, let alone the rest of it's liabilities or costs.

misssocrates 4y ago

He overpaid and that was already well known before he even took the reigns.

dragontamer 4y ago
Overpaying by well over double is... a bad business decision. Is it not? Even as bad as the stock market was last year, very few companies lost 50%+ of their value. -------- There's a lot of other decisions that are very strange coming out of Tesla, such as the removal of RADAR and Ultrasonic Sensors. Does Elon Musk really believe he can compete against next-generation companies when he's removing sensors from his cars?
- deleted 4y ago
  [deleted]
- zaroth 4y ago
  Regarding the Tesla comments; Radar is back by the way, with an increased resolution that makes it more useful in highways where overhead signs false positive as a collision risk on the old sensor. The ultrasonic sensors IMO were basically worthless. Initial analysis of the new v4 FSD hardware indicates they are adding more cameras - including bumper cameras to cover blind spots that previously would have relied on ultrasonics. It doesn’t seem like HW4 can be retrofit like HW3 was, so it will be very interesting how that all plays out! https://www.teslarati.com/tesla-hardware-4-hd-radar-first-look-photos/ https://www.teslarati.com/tesla-hardware-4-hd-radar-first-lo... https://mobile.twitter.com/greentheonly/status/1625905220432671015 https://mobile.twitter.com/greentheonly/status/1625905220432...

prottog 4y ago

I mean, the Nasdaq 100 lost almost 30% in 3 months, from March to June of last year. Doesn't mean every CEO fumbled that bad. Or maybe it does!

dragontamer 4y ago
Elon needs to grow Twitter by 50% before he has 'only' a 30% loss. There is a huge difference between 55% drop that Mr Musk has experienced with Twitter, and the 30% drop you're talking about. EDIT: > from March to June of last year That seems like a weird comparison? An apples-to-apples benchmark would be the Nasdaq 100 from November last year (when Musk finished buying Twitter) to March this year.

coldcode 4y ago

It's not worth $20B, that's just his ego talking. I can see it being worth $4B. It has no long term path to any kind of high growth multiple. Twitter was always an amazingly useful concept but not a big money making business idea. At best it could become like a steady ultility company.

dragontamer 4y ago
I'm steelmanning my argument. But yes, you're right. I can't imagine a real VC firm buying Twitter today at $20+ B. Note that Twitter has a $13 Billion loan with $1.3 Billion/year in interest payments in a rising interest rate economy while VC banks like SIVB are failing. That means to buy Twitter at $20B valuation, the VC firm would need to spend $33 Billion. ($20 B valuation + $13 Billion loan) I honestly don't see this company having enough runway to even reach the $1.3 Billion/year interest payment, let alone the rest of it's liabilities or costs.