I wasn’t going to write about this, but so many requests and contacts have come in, and considering that my background conversations with people are leading to actionable positioning, that I feel it is only fair to share publicly what I am analyzing privately.
The predicate for all assumptions is several fold: {Go Deep One} and {Go Deep Two}. Most of the financial groundwork for analysis already exists. In summary, Elon paid $44 billion for the platform. Current valuations are around $15 billion. Current debt service is $1.5 billion/yr (roughly $100m/mo). Current expenses include $100m/yr AWS, $100m/yr Goog cloud (both contracts), +payroll and misc.
Approximately 9 months ago, Musk had $1 billion in cash reserve for Twitter. The burn rate deficit was roughly $100m/month. That put timeline estimates for an inflection point on/around October 2023. It is now October 2023.
Approximately a week ago, Twitter CEO Linda Yaccarino made a bold statement. Yaccarino stated that from her review of the current status, Twitter would start to turn a profit in the first quarter of 2024 {link}. However, with $100 million per month in debt service alone, this statement seemed too far of a stretch. At pre-musk levels of revenue, maybe; but that $1.5 billion debt service is a heavy nut to carry.
Timing – Remember, it’s October. Last Friday, the Securities and Exchange Commission (SEC) gave special regulatory approval to Bill Ackman’s firm, Pershing Square (hedge fund), for a new investment vessel called SPARC, whose purpose is to invest in private companies in order to take them public. As noted by CNBC, “In a SPARC, investors will know what company the financing vehicle would be used to merge with before they have to pledge their investments.” The financial mechanism avoids some of the issues with typical IPO’s.
•It’s October, inflection time. •Yaccarino says a strategy is underway for profitability in Q1 2024. •Ackman gets SPARC approval, and then suddenly:
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