When does the crashing and burning begin? I've heard for many weeks now that this is imminent, or will eventually happen. But what I see is this:
- A lot of people said they would leave, but Twitter seems to have more members than ever, who are more active than ever (if we believe Elon, and I do until someone can show me the oppositie is happening).
- Some high profile members were loudly announcing they were leaving or considering leaving Twitter, yet I'm under the impression they are still active (which makes sense if you have tens or hundreds of thousands of followers and then you go to Mastodon or some other wasteland and suddenly have no audience and no feedback).
- The site would crash, but that hasn't materialized.
- All advertisers would leave, but last I heard most have resumed advertising after a short pause (they want to be where the eyeballs are).
- Usability is improving, with fewer bots/scams.
So how is it going to crash and burn? Or is that just dramatized wishful thinking?
The crashing and burning happened last week when TSLA dropped like a rock from Elon selling shares.
My take is this: Elon made an impulse offer to buy Twitter for $44B and waived dd. He realized it was a mistake after the market crashed, but he screwed up big time when he did not foresee TSLA falling so much and backed some of the purchase with margin against his Tesla shares. No doubt some investors backed out because the acquisition was too rich, which made the loan even higher.
As TSLA goes down Elon is forced to sell more stock, a painful experience that anyone who is heavily in margin understands. But what makes it more painful for Elon is that his stock selling drives TSLA further down, making the remainder of his margin loans more vulnerable to margin calls in the future.
Additionally, my margin loan interest rates are now 7%, up from 2% earlier this year. I'm sure Elon's loans are comparable, so Twitter has a huge amount of debt payments to make.
IMO, all his flailing on Twitter is just window dressing. Companies go bankrupt on cash flow and profits, not on number of subscribers or advertisers. Twitter was losing money when it didn't have as much debt and all its advertisers, but is digging a hole to Shanghai gigafactory with the additional debt.
I joined this thread when it was in the investment section. His Twitter actions (selling stock, tweets) clearly and unequivocally have an impact on SP. Some will say only short term impact, some medium term, but anyone who denies any impact is not credible, especially when the short term impact of dropping SP forces Elon to sell huge amounts of stock.
I don't think investors could care less about whether Twitter crashes or burns if it had no effect on TSLA. But excessive drops at random times impact investors who have to sell to fund expenses, have been getting margin called due to Elon's sales of TSLA to fund his Twitter debacle, options holders have been wiped out, etc, so a lot of investors care.
Although I manage my margin and options very proactively to ensure I never come close to forced selling, events around Twitter definitely have a huge impact on my investment.
What amazes me are the Elon supporters who claim everything is fine at Twitter when no one knows any details about its financials. These are the same people who know details on Tesla cargo ships and loading times from China, margins to .1%, and production numbers to the thousand.
Yet without any idea of the margin payments, loan size, or cash flow at Twitter, they boldly proclaim everything is OK. Where are the first principles in that?
Note: A mod explained why the thread was moved to off-topic. Unfortunate because this topic is relevant to investors, but the additional load it imposes causes problems.