I’m not always right. Sometimes events change and intersections take place on the path toward the predicted outcome. However, when ancillary events -mostly driven by human intervention in an effort to avoid what’s coming- do not cross the directional path, we arrive at the predicted destination.
At the end of May CTH shared the motive behind a series of events we should see unfold on the Twitter platform. By the time we arrived in June, there was enough actual data to solidify a timeline {GO DEEP}. Shortly after, the New York Times published leaked revenue side documents allowing us to calculate an accurate burn rate {Go Deep} for the situation around Elon Musk. Through this accurate financial prism, everything that Elon Musk has done lines up in sequence {Go Deep}.
Cliff Notes Version: Musk has a deficit burn rate of around $250 to $300 million per month. Musk runs out of working capital in Sept/Oct, depending on how quickly Yaccarino was/is able to enhance revenue.
Regardless of revenue, and because she just can’t generate it fast enough, approximately, seven weeks from now Musk has to secure another roughly $5 billion, to give himself enough breathing room to continue operations.
Musk has lost the $30 billion he put in. The current estimates are that Twitter is now worth between $12 to $15 billion. There is debt of $12.5 billion from the initial purchase structure still in place. The asset is worth its debt, not much more.
With a current debt service of $100+ million per month, adding another $50 million/month ($5 billion loan) is tenuous at best. And that’s IF he can secure that investment loan. Musk has admitted he is personally limited in leverage using Tesla. He is approaching an inflexion point. 1 million subscribers paying $8/month is pittance ($8 million).
Recently X-Corp: (1) Linda Yaccarino introduced the novel concept of speech that was “lawful but awful” and must be suppressed. (2) Their desire to remove the block function. (3) Restrictions on visibility, “freedom of speech, not freedom of reach.” (4) and hired back a platform censorship team. All of these measures are designed to make “safe spaces” for advertisers to return. In essence, they are all revenue decisions.
People inside tech, and even people inside the X-Corp organization, who initially did not think my analysis was accurate, are now starting to admit it is the most likely scenario.
This arc of directional travel is not going to change, especially with Musk needing to go back into the capital markets for more working cash. Everything we are seeing is a result of this financial dynamic and the desperation is starting to show.
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