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Musk Twitter battle - Mastering Commercial awareness questions in interviews
Elon Musk - Elongated Twitter battle enters its concluding stages.
On deciding to complete the acquisition of Twitter, in what is a significantly dispirited tech market, Elon will irrefutably be overpaying for what is a laggard in the social media space.
Twitter being the third in a three horse race, behind Facebook and TikTok seems to have secured an attractive deal for its shareholders.
Although scarred by fake bot accounts, Twitter board and management will defintiely come out on top, even if they put pen to paper on the lower $50 share price, and agree to the 8% discount from the $54 previously agreed.
Elon's higher bid price is the only reason why Twitter's share price have held up better than rivals Meta and Google in the past few months.
Musk will not only have to pay the higher ticket price for Twitter but also convince debt investors on the more expensive deal.
No small feet given that new debt raised will now attract much higher interest rate.
Treasury yields are now 100bps higher than when the deal was first annouced.
With 90% of revenue for Twitter stemming from advertising, what we find most interesting is how Elon will reshape the strategic roadmap of Twitter to redefine its growth trajectory.
While it's quite clear that "Elon the Investor" has failed to time the acquisition well, what we are curious to see is how "Elon the Entrepreneur" will do with the company.
Only time and Elon's tweets will reveal all. 😉
According to Morningstar, at a price of $54, Musk is purchasing Twitter for 7.4x 2023 revenue and 34.1x adjusted EBITDA.
Pare this to the social media leaders, Facebook currently trading at 2023 sales and adjusted EBITDA multiples of 2.6x and 6.0x respectively.
SNAP is trading at 2.9x and 19.4x of sales and EBITDA respectively.
Musk seems to be paying atleast three times higher than some of the leaders in the space.
Ouch!!. 🤕
That's gonna hurt.
What do you think - Do you believe "Elon the Entrepreneur" will make up for the losses of "Elon the Banker"?
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