“Despite being the richest man in the world,” Elon Musk doesn’t have enough cash to buy Twitter for $44 billion, podcaster and CNBC contributor Dan Nathan tells New Abnormal co-host Molly Jong-Fast, so he’s selling Tesla stock to get some of that cash in hand and then bringing in private equity and venture capital to cover the difference.
“But the problem here very simply is that the stock is not worth $43 billion when all of its public comps are going much lower every day on a NASDAQ that’s careening lower, that’s down about 27 percent on the year. It makes absolutely no sense to pay that unless he thinks he can take it private and have some really smart co-investors with him and retool this thing and it comes out as a $100 billion business,” says Nathan. “But the thing is without Elon, if he is no longer interested and if Tesla goes too much lower and Twitter’s value sticks out like a sore thumb, being way overexposed, all of those private equity and VC people who’ve lined up to co-invest with him will be gone if he’s not there… Part of the allure is riding his coattails. People think he’s a genius and he’ll be able to fix all the big problems.”
“My big issue with this is I think it’s all a big fugazi. I think that he’s used it as a big ruse, as an excuse to sell a lot of Tesla stock, which he has done. He started selling last fall. He put out a tweet saying, ‘Should I sell Tesla stock to pay taxes?’ Then he put out a tweet a couple months ago, ‘Should I sell Tesla stock to buy Twitter stock?’ And so the stock has gone down. The stock was trading at 1150 a little more than a month ago. Right now, it's about 745. That’s hundreds of billions of dollars in market cap that’s gone. If it goes much lower, he will not be able to buy Twitter. And I think he used Twitter as a big excuse to sell Tesla stock.”
And, Nathan predicts, don’t count on the deal closing in three months as Musk has said it will, since, “Anybody who’s been following Tesla over the last 15 years knows Elon Musk is not particularly good at forecasting timelines. The longer it goes, the less likely it is to close because the value [keeps dropping], and not only that you see this all the time in M&A when companies are locked up in these sorts of battles, there’s nobody within Twitter who’s particularly excited about Elon buying it. He said he’s gonna be the CEO. So think about how unmotivated all those employees are right now. The business is gonna continue to get worse before it gets better. Advertisers, which they make most of their money on, are gonna continue to look at other places.”
The bottom line? “For Elon, I think this is a vanity thing, too. Pull up the biggest Twitter accounts—I think he wants to be the biggest,” says Nathan. Here’s a guy, I think, who just needs a hug. I think he looks at stuff like that and I think he looks at all of his replies too, and he really takes them in. So here’s a guy who’s trying to fix some of the biggest problems on this planet and trying to get us to another planet, and yet he’s dicking around with Twitter in the name of free speech—it just seems like a bunch of bullshit.”
Plus, Molly and co-host Andy Levy go in on another week full of conservative fuckery, and The Daily Beast senior editor Matt Fuller explains how “the abortion landscape really has changed” after the leak of the draft opinion doing away with Roe. “This is a fundamental change in America and yeah, I think there’s gonna be a lot of pissed-off voters. A lot of women who are, who are rightfully outraged about this whole thing and are gonna look to their senators and say, ‘What are you doing about this?’ And at that point, you know, these races very well could come down to abortion.”