Elon Musk has closed out his margin loans, linked to Tesla shares, and pledged another $6.25 billion in equity to fund his $44 billion takeover of the social media website.
Twitter (TWTR) – Get Twitter, Inc. Report shares moved firmly higher Thursday after Tesla (TSLA) – Get Tesla Inc Report CEO Elon Musk added another $6.25 billion in equity to the financing package in his $44 billion takeover bid.
In a Securities and Exchange Commission filing last night, Musk said he’s reduced his margin loan linked to his Tesla shares to zero, while boosting the overall equity portion of his takeover to $33.5 billion. Reports also suggest Musk is attempting to convince Twitter founder Jack Dorsey, who resigned from the board yesterday, to roll his existing stake into the privatized company if and when the takeover is completed.
Musk’s financing move not only reduces the overhang on Tesla shares — which are down 42.7% since he first made his holding int Twitter shares public on April 4 — but also reaffirms his commitment to the deal following last week’s spat over the size and scope of so-called ‘bot’ accounts on the social media platform.
For its part, Twitter appears sanguine with respect to Musk’s desire to own the group, but sent a message regarding his plans for changes to the micro-blogging website by refusing to re-elect Silver Lake co-chief executive Egon Durban — a key Musk ally — to the board of directors during yesterday’s annual shareholders meeting.
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Twitter shares were marked 5.5% higher in premarket trading to indicate an opening bell price of $39.20 each, a move that still leave the stock some 27.7% south of Musk’s ‘best and final’ offer of $54.20 per share.
Tesla shares, meanwhile, were marked 0.05% lower at $658.50 each.
Beyond uncertainty linked to Musk’s on-again, off-again takeover ambitions lies concern linked to the platform’s reliance on advertising revenues.
Snap Inc. SNAP, which makes the Snapchat messaging app, cautioned in a late Monday Securities and Exchange Commission filing that the group is likely to report sales and profits “below the low end of our Q2 2022 guidance range” thanks in part to a ‘deteriorating’ global economy that will hammer ad spending.
Social media groups have also cautioned that Apple’s (AAPL) – Get Apple Inc. Report Identifier for Advertisers (IDFA) privacy changes, which make it more difficult to track and target users with specific ads, have impacted both user growth and top line revenue gains.
Twitter, in fact, agreed to a $150 million settlement with the U.S. Federal Trade Commission Wednesday over allegations that it misrepresented user data privacy over a six year period that ended in September of 2019.
