Elon Musk seeks investors for Twitter

Posted Dec 18 2022 at 20:00Updated Dec 18. 2022 at 20:08

Capital changes in sight at Twitter? Two months after buying the social network for 44 billion dollars, Elon Musk is looking to raise funds from investors, US media outlet Semafor reported over the weekend. Several investors have been contacted by Jared Birchall, the managing director of the “family office” which manages the fortune of Elon Musk.

According to Semafor, Elon Musk could issue new Twitter shares and sell them for $54.20 per share – exactly the price paid by the billionaire when buying the platform this fall. According to the pitch document, the fundraising should be done “before the end of the year”. Elon Musk’s team reportedly launched the project after receiving “numerous” expressions of interest.

Among the targets approached are, for example, Ross Gerber, CEO of investment bank Gerber Kawasaki ($1.7 billion in assets under management). The investor had already bet $1 million when Elon Musk took over Twitter. According to Semafor, Ross Gerber has not ruled out participating in a new funding round, depending on the plan presented by Musk.

Massive loss of revenue

This fundraising comes after major operational changes at Twitter. Since his arrival at the helm, Elon Musk thanked the management team, fired half of the workforce worldwide and revived the paid Twitter Blue plan. On the content front, the boss of Tesla has also set himself up as moderator-in-chief, with arbitrary decisions, far from the standards of moderation generally applied by social networks.

This week, his decision to arbitrarily block a dozen journalists, whom he accused of endangering his family, led to the lifting of convictions from the UN to the European Union, until they are allowed again. However, these changes have scared away advertisers who finance 90% of Twitter through digital advertising. In recent weeks, Elon Musk himself had recognized that the platform was recording “a massive loss” of income, when it was already fragile before the takeover by the billionaire.

A debt of 25 billion dollars

In this context, Elon Musk needs new money to be able to finance his future projects for Twitter. But this fundraising must also help him reduce his debt and pay the interest. To redeem Twitter, the businessman had to contract a debt of 25.5 billion dollars – half of which in Tesla shares provided as collateral.

However, in the meantime, the rise in rates and the flight of advertisers have created additional financial pressure, forcing Elon Musk to sell part of his Tesla shares. Since the start of the year, the businessman has sold $40 billion worth of Tesla shares – including $3.6 billion again this week.

It remains to be seen now which investors will participate in the round. Elon Musk admitted to having “overpaid” Twitter, but he now offers them to invest at the same price as him… The advertisers’ flight does not help either. However, Elon Musk can count on the support of the big tech bosses in Silicon Valley, from Mark Zuckerberg (Meta) to Reed Hastings (Netflix). Larry Ellison, the boss of Oracle software, had thus brought him 1 billion during the takeover of Twitter.

Prohibition of posting links to competing social networks

Twitter users will no longer have the right to post links to several competing social networks, the platform announced in a statement on Sunday.

“Twitter no longer allows free promotion of certain social networks on Twitter,” the statement said, noting that Facebook, Instagram, Mastodon, Truth Social, Tribel, Post and Nostr are affected, as well as “links to social network aggregators social media like linktr.ee, lnk.bio”.

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Elon Musk seeks investors for Twitter

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