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Who’s Footing Elon’s Bill?

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October 21, 2022 6:51 p.m.

It’s quite difficult to see from the business press whether Elon Musk’s purchase of Twitter is about to go through or not. But if it does it will be critical to look closely at the identities of the foreign and sovereign wealth fund investors who are behind his purchase.

There are good arguments that Musk is purchasing it at as much as four times its actual value. Before he expressed interest in the purchase it was trading at little more than half the agreed purchase price. Put it yet another way, Musk is buying Twitter for almost 50x EBITDA. That happens in the hockey stick world of tech sometimes. But Twitter is not an early stage company.

Yesterday it was reported that Musk plans to cut some 75% of the workforce and radically scale back content moderation. That may be music to some people’s ears for ideological reasons. And it certainly may cut costs. But it won’t be good news at all for any plausible path toward making Twitter profitable or growing its value in a way that makes a successful exit possible.

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