Can Elon Musk Make Twitter’s Numbers Work?

However, interest rates on loans reflect the risk that they may not be repaid. Banks do not hold on to the loan but sell it to other investors in the market, so if Twitter cannot pay its debts, Mr. Musk will either have to pay those investors, perhaps by selling more Tesla stock, or it could give up some of its ownership of Twitter, and dilute its stake.

Tesla had a market value of $ 902 billion as of Friday, but Mr. In early April, Musk first revealed that he had bought a large stake in Twitter. If Twitter’s finances go south, Mr. Musk will sell more Tesla stock to pay off Twitter’s debt or mortgage more shares as collateral for his personal loan, which could put further pressure on Tesla’s share price. Mr. Musk does not receive a salary from Tesla but pays in stocks based on performance milestones including the company’s share price.

Since then Mr. Musk first announced its stake, with the tech-heavy Nasdaq index falling more than 10 percent, making its offer look more liberal. “It’s a high price and your shareholders will love it,” he said. Musk said in a letter to Twitter’s board. However, shares of the social media company traded higher than Mr. Just six months before Musk’s offer, it fell far short of that price earlier this year and is unlikely to return to that height any time soon.

Mr. Musk plans to partner with investment companies in his bid to buy Twitter, which will reduce the amount he has to invest individually. According to two people familiar with the discussion, he could still partner with a firm or other investor, such as the Family Office, to help raise cash.

Thomas Bravo, a technology-focused buyout firm, has indicated a willingness to lend a little, but nothing has been decided yet. Apollo, an alternative asset manager, also looks at potential deals where it will extend the loan on the terms of choice.

If the math of the deal becomes unpleasant for Mr. Musk, he has an out: breakup fee of $ 1 billion. For a man with an estimated wealth of over $ 200 billion, that’s a small price to pay.

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