As the sibling pointed out, private companies don't have stock prices. But I've read estimates that Twitter is worth less $10B now, so less than a quarter what Musk paid for it.
The banks just recently did a debt sale of a lot of that debt close to list price, so 44 billion dollar valuation is probably reasonable. Apparently the company is profitable now, sans the debt, so as long as it doesn't go out of business and can grow on other fronts then it's probably not a problem.
Fidelty, which still owns a decent chunk of X, and is required by law to do due diligence on the value of that holding, and also has deeper insight into the value of X since they are also required to see X financials (since they own a big chunk of the private value), puts X value at 20% of the original 44B.
> Banks have completed the sale of $5.5 billion in debt for Elon Musk's X, according a Wednesday report by the Wall Street Journal. The debt offering was increased following a strong response from investors. Ultimately, the loans were sold at 97 cents on the dollar.
This is not the same, as no ownership was traded, but it signaled surprising confidence that the debt could be sold with only a small discount.
That does not value X at $44B as the poster claimed. It also states “ These floating-rate debts have an interest rate of around 11%, making the borrowing costs several percentage points higher than even the riskiest loans on Wall Street.” which is a spectacular admission the markets put X on incredibly shaky ground.
X being forced to sell off debt at such extraordinarily bad terms means X is likely about to implode.
What، acompany needs to cover the costs of how it was acquired, now? If it's valued at the price it was purchased and making a positive revenue stream then it is profitable.
3. Carry out weird financial/legal alchemy to make the victim company solely responsible for paying off the loan
4. If the victim company can’t handle the debt and goes bankrupt, then you don’t own the company any more. That’s sad. Especially for the people who lose their jobs. But the people you borrowed the cash from can’t chase you for it, so no harm done, eh?
5. If the victim company pays off all the debt, then congratulations: you bought a successful profitable company for free!
They need to cover their debts. If someone uses private equity raider tactics to load the company up with debt, it’s likely to be bad for the company but it still counts on their books just as taking payday loans is ill-advised but legal.
You can dress it up in "financial alchemy" like any hedge fund, but it doesn't disguise the fact that the last person to carry that can is going to lose a lot of very real money.
This makes no sense. The debt payments are larger than the company's entire revenue! The Twitter purchase was a financial boondoggle that Elon is attempting to hide with this latest deal.
If I borrow $4 million to buy a house worth $1 million I could technically say that sans the debt I'm a millionaire, but that's hardly a useful or positive claim.
