Elon Musk ended up buying Twitter for $44 billion . A premium of 38% compared to the evaluation made by Wall Street before the takeover. While the price paid doesn’t seem like an issue for the world’s richest man — “I don’t really care about numbers ,” he told a TED talk in April — it’s debatable whether the company is really worth this sum.A PROFITABLE LBO

The financiers of the operation, one of the biggest LBOs in history, will inevitably ask themselves the question at some point, and it will have to be made profitable. Because if Musk is a multi-billionaire, he owes a large part of his wealth to the price of his shares. It is not sitting on billions of cash, and therefore had to borrow, in particular from Morgan Stanley. In all, he raised $25.5 billion in debt to fund the deal, with his Tesla shares serving as collateral for some of the debt (which could be problematic in the event of a precipitous drop in their price). He also commits 21 billion in equity, which would correspond to around 10% of his personal wealth, but will  certainly involve other investors. Twitter ‘s exit from the stock exchange,hailed by its founder Jack Dorsey , must still receive regulatory approval to be completed.

However, Twitter is far from being a cash machine. Created in 2006, the social network did not reap its first profits until 2018. In 2021, it recorded a net loss of 221 million dollars, after having lost 1.1 billion in 2020. The company generated a turnover of 5 billion dollars last year, up 36%, but far from the astronomical results of a social network also financed by advertising like Facebook. The company’s operating results are regularly weighed down by legal cases (809 million dollars spent in 2021 to settle a class action launched by shareholders, 150 million fine in 2020 imposed by the FTC for a personal data breach case ).


How does the boss of Tesla intend to go about transforming the social network and increasing its profitability, willy-nilly? He has already spoken out in favor of reducing his dependence on advertising, which represents 89% of his turnover (85% branding, 15% performance), preferring the subscription model. . Twitter Blue, launched in June 2021 in the United States, Canada, Australia and New Zealand, offers for a monthly subscription of $2.99 ​​access to exclusive features, such as the possibility of undoing a tweet, create bookmark folders, read ad-free articles on partner sites, and use an NFT as a profile picture.

A bit short to seduce a significant part of the platform’s 300 million users, including 217 million daily users, and whose growth Elon Musk himself says is artificially inflated by the robots he wants to get rid of. The entrepreneur had tweeted that he would like to see the subscription price drop and include an ad-free experience, but he deleted those tweets.


What are his other leads? Nothing in his manifesto gives any clue. Instilling more “freedom of expression” and reducing moderation on the social network as he sees fit is not an economic model. Could this “free speech” bring back more users? Donald Trump’s social network (who has also indicated that whatever happens he will not return to Twitter ) has not demonstrated this. As for advertisers, they might be even more reluctant to associate their brand with the platform. As for moderators, Twitter has about 1500, so that’s not where the savings will be substantial. In all, the company employs 7,500 people (+36% in 2021).

So what ? Pay for twitter? Selling a white label application? Create crypto-related activities? Make it a destination platform for content creators? What is this “gigantic potential” that Elon Musk would like to “unlock” ?

Going back to his statements at the April TED talk, buyout “is not a way to make money” . It’s just “extremely important for the future of civilization” , “important for the functioning of democracy, and to help freedom in the world. Civilizational risk will be reduced the more trust in Twitter is high”. As a good big boss, Elon Musk offered himself his “dancer”, attribute of power, democratic standard and lever of influence. It’s not a newspaper, it’s a social network.

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