To The Moon

When I decided to write this post, it is not with regards to his "promise" made on 22 Dec 2022 (see below); that he said (he did not promised) would not further sell $Tesla Motors(TSLA)$ shares in the immediate future.

One only needs to google to know how many times mr musk has renegaded on his words. 

The "promises" are worth a dime a dozen, right. Oops - ha ha!

Now that Tesla's Q4 2022 earnings results are going to be released after market closed on 25 Jan 2023 (Wed); the nagging question in mind is "Will mr musk proceed to "quietly" offload more Tesla shares afterwards" ?  

Note : mr musk will not be violating SEC rules & regulations should he file his 13D to divulge his sell off (if any) within the 10 days timeframe. 

Then again, referring to mr musk's 14 March 2022 further purchased of shares in Twitter, he did not file 13D until 21 days later.

Why The Suspect That Mr Musk Will Offload More TSLA Shares ?

1) 1st Interest Payment on $13 Billion Twitter Loan Is Due 

Original doc - https://markets.businessinsider.com/news/stocks/elon-musk-twitter-bankruptcy-warning-debt-repayment-interest-payment-wirecard-2023-1

Precursor : please read above linked-article and form your own opinion first ok. Thanks.

• Assume the purchase took place "officially" in Oct 2022
• Assume interest payment is every 3 months
• Out of $44 Billion paid to acquire Twitter 100%, $13 Billion was borrowed
• Assume interest rate is at 4.5% pa.
• Using a simple interest calculation method for a 3 months period, it works out to be $146 Million (approx). Logically speaking it should be more as loan's interest is usually higher.

2)  On going & New Lawsuits Filed By Ex-Twitter Staff

• What are the likelihood that mr musk's legal team will be able to win existing and new lawsuits that are popping up; due to labour law incompliance in each of the country that Twitter has presence in ?
• If he loses the lawsuits, is he looking at another massive fine to be levied against Twitter.

3)  More Layoffs, More Severance Payment Upfront

• On 21 Jan 2023 (Sat), mr musk has taken to Twitter to refute CNBC report that there are only 1,300 staff left.
• He said (no proof again only his words) there are still 2,300 (30.57%) staff out of the original 7,500 strength.
• With every tranche of staff made redundant, Twitter needs to make payment on the severance package upfront.
• That's more out "flowing" cash from the coffer.

4) Twitter Dwindling Advertisers' Revenue

• Twitter used to enjoy "healthy" adverstisers' revenue to the tune of almost $1.60 Billion in just Q4 2021 alone (see above chart).
• Even up until Q2 2022, its incoming revenue was almost $ 1.20 Billion.
• However, that was the past. Its history now.

https://www.reuters.com/technology/heres-what-twitter-lost-advertising-revenue-final-months-2022-2023-01-19/

• Original doc - https://www.reuters.com/technology/heres-what-twitter-lost-advertising-revenue-final-months-2022-2023-01-19/
• Precursor - please read above linked-article and form your own opinion first ok. Thanks.
• Since Oct 2022 takeover, 14 of Top 30 advertisers have stopped advertising 100%.
• 4 of Top 30 advertisers have reduced adverts with Twitter between 92% to 98.7%.
• Overall, Top 30 advertisers have spent -42% less with Twitter after takeover.
• Looks like Twitter is just like Tesla German's Giga factory - a Huge Furnance burning resources like there's no tomorrow.

5) Twitter Dwindling Customer Base

Twitter member base - projection

• Looking at Statista projection, Twitter is forecasted to lose 14.5 Million members by 2023.
• Twitter will lose a further 18.2 Million members
• In total over 2 years, projected loss will be 32.7 Million members.
• If this projection is accurate, as an advertiser - does it make sense to continue advertising on a platform that is fast getting "less popular" ?
• Will an advertiser be "better off" advertising at platform with "growing" instead of "sun setting" member base ? 

What Is Possibly Going To Happen Now ?

• Fact : debt is held by Twitter, rather than Musk personally. Twitter is required to pay back around $1.5 billion a year in interest payments, according to the Financial Times
• If Twitter failed to make that payment, its management could file for bankruptcy to initiate a debt restructuring process.
• If bankruptcy is filed, will this drive remaining advertisers to "flee" further evaporating what's left of incoming revenue to Zero ?  
• The consequences for mr musk, who owns an estimated 79% of Twitter, would be immediate & severe.
• Alternatively Twitter could use its limited cash reserves to pay off the debt. How many quarters could this go on before the well dries up ?
• Finally, Musk could sell more of his Tesla shares, having already offloaded nearly $40 billion to help finance the takeover deal.
• What could be a better time than after Q3 2022 earnings report ?
• Looking at all his previous Tesla stock-sale; he always managed to sell them when Tesla's stock price was on the "high end" of the price range.  He always time his sell off - agree ?
• Will this time be any different ?

• Do you think mr musk will permit Twitter to file for bankruptcy; taking into considerations all the possible repercussions ?
• Do you think mr musk will sell his Tesla stocks to finance Twitter's operations ?

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