Not only does he not have the 44 billion dollars in cash to buy back Twitter if justice finally forces him to do so, but he seems to have trouble being able to count on the financiers who, at the start, had promised to support him. Perhaps he is also afraid of the stock market.
Last week, New York financial circles confirmed that Elon Musk had sold 8.5 billion Tesla shares. Banal arbitrage operation to take advantage of the market. Many fear indeed a lasting decline in stock prices, given the prospects of recession in the US economy.
The explanation is too vague and has not convinced market operators who now believe that Elon Musk risks having problems with available liquidity if American justice forces him, next month, to carry out the operation of takeover on Twitter as he had promised and on which he is backing down very clearly.
The facts are very simple. Almost a year ago, the founder of Tesla announced his plan to buy the Twitter network, which for him has become a guarantor of American democracy. Elon Musk knows Twitter well, he has a community of more than 100 million subscribers to whom he speaks regularly, to whom he asks for advice and he very often uses his tweets to influence the markets. He considers that Twitter has become a power in its own right, an essential cog in democracy, but he is wary of leaders whom he suspects of using the algorithm to sometimes influence public opinion and influence political balances.
Deep down, no one knows if he’s right or not, but many consider him credible. Publicity stunt or bluff, he had signed a promise to sell for a historic amount. The deal provided for the acquisition of the social network for 44 billion dollars, he announced that he could provide 33 billion dollars in equity, then the balance, that is to say 11 billion from a few billionaire friends like him or some investment funds.
Kering, the entrepreneur who went from wood to luxury in one generation
Lhe problem with this case is that he changed his mind a few weeks ago, claiming that the deal significantly overvalued Twitterr. And to justify his attitude, he implied that Twitter did not have the followers he claimed to have. Not only did he think that 10% of the wallet was made up of non-existent subscribers, but also that a large part had been bought.
Twitter did not take time to refuse these explanations and by his lawyers, put Elon Musk on notice to pay.
The boss of Tesla therefore risks having to pay as early as September, even if it means appealing later.
Elon Musk obviously has the means. The richest man in the world would have more than 250 billion dollars under the foot. But his fortune is far from being liquid, it is even highly vulnerable. It is linked to the economic situation, to the future of electric mobility, to the solvency of space travel, but also to its formidable capacity to inspire dreams and inspire confidence.
However, the financial circles believe that Elon Musk is a product of the times, he is fashionable and his stock market fortune is linked to this fashion effect. But fashion, by definition, risks going out of fashion one day or another.
Elon Musk is therefore selling Tesla shares, because they are still very well rated. Last year, he had already liquidated 8 billion Tesla shares in November, taking advantage of a market rebound. He therefore renewed the operation last week.
The fear of running out of cash if justice obliges him to respect his commitment on Twitter and the reversal of the situation which blurs the horizon of the financiers undoubtedly oblige him to return to the ranks.