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Bloomberg: Musk Warns Twitter Bankruptcy Possible as Senior Executives Exit

27 points by ramish94 4y ago

xqcgrek2 4y ago
https://archive.ph/CshEo https://archive.ph/CshEo
rrwo 4y ago
How is it legal to be able to get a loan to buy a company, then transfer that loan to the company you bought, then let the company burn to the ground from the crushing debt?
- jarsin 4y ago
  Wall St. calls it "Creative Destruction"
- xqcgrek2 4y ago
  Why shouldn't it be legal? The entities that gave the loan knew the risks.
  - slantedview 4y ago
    > Why shouldn't it be legal? Because it's destructive to the economy. The only winners when this happens are the execs who arranged the deal, which is why Twitter's execs pushed so hard for the Musk deal to close even though the outcome was going to be bad for everyone else. To put it another way - a lot of businesses would still be operating and a lot of people would still have jobs if LBOs were illegal.
    - sidibe 4y ago
      The only winners were the Twitter shareholders, who the execs are supposed to represent.
      - papito 4y ago
        This has been a trend in this late stage Capitalism, if you will. A large group of people spend years and decades building a company that can still grow and produce immense wealth over long-term, but a bunch of grifters roll in and sell it for parts, because "shareholders". The job of the board is to assure long-term growth of the investment, not a one-time burn-it-all-down event or a slow bleed (GE, Boeing) where the shareholders get unreasonable returns while annihilating the hard work building up the company. These are not company-building boards, these are company-destroying boards. Literally, vulture capitalists from the inside.
- slantedview 4y ago
  This called a "leveraged buyout". Everyone who learns about them is shocked, and they absolutely should be illegal, but they aren't. It's very common for companies purchased in this way to go bankrupt, because the debt is too heavy a burden. Many name brand companies have gone down over the last decade because of this.
  - TheLoafOfBread 4y ago
    Lot of people who trusted Elon are going to lose their money then. Are we going to see consequences on Elon's well being?
    - deleted 4y ago
      [deleted]
    - slantedview 4y ago
      Those people should have done more diligence. The text messages with Larry Ellison show he committed 1 billion dollars more or less on a whim. It's pretty easy to see now that buying Twitter and saddling it with debt was never going to work.
      - saurik 4y ago
        Yeah but like, if nothing else I imagine Musk is never going to get people to hand him a billion dollars on a whim again? I would think that screwing over this many investors simply has to cause a blow to one's credibility.
    - pmlnr 4y ago
      > Lot of people who trusted Elon are going to lose their money Good. Trust Elon the same way you'd trust Lex Luthor.
      - deleted 4y ago
        [deleted]
  - 4y ago
MontyCarloHall 4y ago
I wonder if the downfall of Twitter will herald the start of the adpocalypse—advertisers realizing en masse that the ROI of internet advertising isn’t worth the spend. Have advertisers ever completely pulled out so abruptly from such a large platform before? If they notice that their revenue remains within forecast intervals, perhaps they will realize that their Twitter ad buys were doing nothing for their bottom line, and investigate whether ad buys on other platforms are similarly worthless.
- grappler 4y ago
  if internet advertising really is that ineffective, how does one explain the incredible amount of it, its permeation of seemingly everything, and the amounts of money involved?
  - salawat 4y ago
    Mayhaps selling people things was secondary to aggregation of data on behavioral patterns? In a capitalist system, of you want a surveillance network without saying you want a surveillance network, saying "it's for marketing" is about the path of least resistance.
  - nathanaldensr 4y ago
    Mass formation?
    - grappler 4y ago
      just by using that term, you leave the impression that you're on a weird fringe information diet. e.g. https://apnews.com/article/coronavirus-pandemic-science-health-joe-rogan-ap-fact-check-a87b1044c6256968dcc33886a36c949f https://apnews.com/article/coronavirus-pandemic-science-heal...
deleted 4y ago
[deleted]

27 points by ramish94 4y ago

https://archive.ph/CshEo https://archive.ph/CshEo

rrwo 4y ago

How is it legal to be able to get a loan to buy a company, then transfer that loan to the company you bought, then let the company burn to the ground from the crushing debt?

jarsin 4y ago
Wall St. calls it "Creative Destruction"
xqcgrek2 4y ago
Why shouldn't it be legal? The entities that gave the loan knew the risks.
- slantedview 4y ago
  > Why shouldn't it be legal? Because it's destructive to the economy. The only winners when this happens are the execs who arranged the deal, which is why Twitter's execs pushed so hard for the Musk deal to close even though the outcome was going to be bad for everyone else. To put it another way - a lot of businesses would still be operating and a lot of people would still have jobs if LBOs were illegal.
  - sidibe 4y ago
    The only winners were the Twitter shareholders, who the execs are supposed to represent.
    - papito 4y ago
      This has been a trend in this late stage Capitalism, if you will. A large group of people spend years and decades building a company that can still grow and produce immense wealth over long-term, but a bunch of grifters roll in and sell it for parts, because "shareholders". The job of the board is to assure long-term growth of the investment, not a one-time burn-it-all-down event or a slow bleed (GE, Boeing) where the shareholders get unreasonable returns while annihilating the hard work building up the company. These are not company-building boards, these are company-destroying boards. Literally, vulture capitalists from the inside.
slantedview 4y ago
This called a "leveraged buyout". Everyone who learns about them is shocked, and they absolutely should be illegal, but they aren't. It's very common for companies purchased in this way to go bankrupt, because the debt is too heavy a burden. Many name brand companies have gone down over the last decade because of this.
- TheLoafOfBread 4y ago
  Lot of people who trusted Elon are going to lose their money then. Are we going to see consequences on Elon's well being?
  - deleted 4y ago
    [deleted]
  - slantedview 4y ago
    Those people should have done more diligence. The text messages with Larry Ellison show he committed 1 billion dollars more or less on a whim. It's pretty easy to see now that buying Twitter and saddling it with debt was never going to work.
    - saurik 4y ago
      Yeah but like, if nothing else I imagine Musk is never going to get people to hand him a billion dollars on a whim again? I would think that screwing over this many investors simply has to cause a blow to one's credibility.
  - pmlnr 4y ago
    > Lot of people who trusted Elon are going to lose their money Good. Trust Elon the same way you'd trust Lex Luthor.
    - deleted 4y ago
      [deleted]
- 4y ago

MontyCarloHall 4y ago

I wonder if the downfall of Twitter will herald the start of the adpocalypse—advertisers realizing en masse that the ROI of internet advertising isn’t worth the spend. Have advertisers ever completely pulled out so abruptly from such a large platform before? If they notice that their revenue remains within forecast intervals, perhaps they will realize that their Twitter ad buys were doing nothing for their bottom line, and investigate whether ad buys on other platforms are similarly worthless.

grappler 4y ago
if internet advertising really is that ineffective, how does one explain the incredible amount of it, its permeation of seemingly everything, and the amounts of money involved?
- salawat 4y ago
  Mayhaps selling people things was secondary to aggregation of data on behavioral patterns? In a capitalist system, of you want a surveillance network without saying you want a surveillance network, saying "it's for marketing" is about the path of least resistance.
- nathanaldensr 4y ago
  Mass formation?
  - grappler 4y ago
    just by using that term, you leave the impression that you're on a weird fringe information diet. e.g. https://apnews.com/article/coronavirus-pandemic-science-health-joe-rogan-ap-fact-check-a87b1044c6256968dcc33886a36c949f https://apnews.com/article/coronavirus-pandemic-science-heal...

deleted 4y ago

[deleted]