This depends on whether their ownership is solely via options.
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Or honestly whether it’s even true. The NYT / WAPO articles hit saying mass layoffs were happening Saturday, Sunday, Monday, but so far nobody’s come forward having been laid off.
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Right (or vesting restricted stock). But I believe these CxOs are relatively new to the company, aren’t they? So they probably have a good chunk unvested.
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My guess is that he wanted to do it as a way of clawing back bonus and options payouts and had his minions float the idea, but then his more sober advisors prevailed by citing California labour laws.
That he’s still threatening to fire people who don’t deliver by his 7 November deadline makes me suspect he still wants to try to screw them over. It’s not realistic from a legal POV, either, but that never stops him.
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I think he’s just driving trollies people.
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That’s part of it but I also think he knows he’s put himself in a real bind here with his creditors. Trying to brazen it out and play to the fanbois is a tactic he’s used before but it’s not going to work so well with a screw-up of this magnitude.
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He has this gimmick where he convinces people it’s him against the world, and only he is the one that can do it. It’s like with his stupid cars… he patented and froze people out of electric car things, established a position based on his monopolization of certain patents and actual lithium products, told everyone Tesla was the only company doing these things because no one else could, and then profited off those statements.
Same thing with SpaceX. His lobbyists pushed against anything NASA and intentionally lowballed bidding on a variety of ULA key projects, and then said SpaceX was the only one who could do these cool things.
So I don’t expect any different behavior at twitter. It’s me against the world, the press is just lying because they’re biased against me and hate me, just like usual, and I’m the only one who can do these things.
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I’m certainly no fan of Musk but ULA is still doing ok, and they’ve got lobbyists of their own. They aren’t exactly a mom-and-pop operation.
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Oh, I’m not saying he has “beaten” ULA or anything. Just that his gimmick is to claim he’s the only and best option for something even though numerous people are better and have been doing it longer, or he cheated to be the only option really available.
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I am not sure Musk is a big enough fish for that to apply. Obviously he is extremely wealthy for an individual, but on the other side we have quite a few of the biggest banks. Ten digits are enough to make them care but not enough to ruin them. Musk has a lot to lose and they can make his life very miserable.
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It’s probably an important distinction to note… Elon Musk doesn’t owe the bank.
Twitter owes the bank.
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They weren’t able to sell that debt on the market & own it. They’re on the hook.
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Some of these option and grants automatically vest with a change in corporate control. So Musk buys Twitter, and everyone with options or stock grants automatically vests. It would explain why they were eager to force the deal in addition to it being good for existing shareholders.
This may be why he is trying to fire them for cause. It would be the only way to claw them back.
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It’s shaping up to be a weird, broken version of a leveraged buy-out.
The usual Mob bust-out LBO formula as practised by vulture capitalists like Mitt Romney works something like this:
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Private equity firm does research to identify distressed public company with a known brand but a rock-bottom share price and little fundamental value left.
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PE firm buys company at a fire-sale price using a combination of its own money and short-term loans from 3rd-party investment banks and funds.
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PE firm takes company private, immediately loads it up with debt they don’t plan on paying off and strips any assets that still have value.
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PE firm uses the money realised themselves to quickly pay off the 3rd-party loans (with a small amount of profit for the lenders) and – more importantly – to pay themselves back with a large amount of profit.
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PE firm either offloads the husk of the company on suckers (sometimes by taking it public again, always by hyping non-existent value) or just lets it die on its own. The firm made its profit so it doesn’t care.
There are several things that make this situation different.
A. Twitter was acquired under duress, due to a lack of research and sloppy due diligence on the deal by the impulsive Musk. Until last week he was desperately trying to get out of the deal through the courts and the press. His pretense now that he wanted it all along isn’t convincing.
B. Twitter stock was acquired by Musk at a premium. Whatever the real fundamentals and distorted P/E, the market did not see Twitter as a distressed company or a cheap buy. That also means that for Musk the third-party lenders (including and greedy thuggish ones like Prince Bonesaw’s family) were not just nice-to-have wants but desperate needs, since he couldn’t cover it all on his own.
C. There’s not much to be stripped in terms of assets at Twitter (the brand isn’t going anywhere, the dwindling userbase can’t be sold. Maybe some of the patents.). Musk also can’t load the company up with debt because other potential lenders will know it’s a risky bet despite his hype and his “visionary” reputation. That’s why he’s now trying to (illegally) claw back money from the execs and employees and why he’s trying to impose new fee structures.
D. Due to A, B and C, Musk’s third-party lenders likely didn’t expect to be paid back according to the normal vulture capitalist model above. His fanbois may have fronted him the money with no strings attached, but not these sharks. My guess is that they made him pony up his TSLA stock and perhaps also his equity in SpaceX as collateral. Depending on the terms, they’ll give him 9-12 months to flail about and the Saudis and others will take advantage of the situation to censor criticism, but in the end they know that he’s going to fail. When he does they’ll take control of Tesla and SpaceX and leave him controlling the remains of Twitter along with stuff they don’t want like Neuralink and The Boring Company.
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Another desperate showboat move.
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I think the real prize their would be Space X. And I would worry about some of his new business partners messing with Starlink.
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I wonder how TSLA stockholders feel about that.
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They’re betting on luxury suites on one of the ark ships.
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As I understand it, there is a $6.25 billion loan to Musk personally, secured by $62.5 billlion worth of Tesla stock. To me that sounds like the banks plan to get their pound of flesh one way or the other.
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Sources: Morgan Stanley and six banks plan to hold $12.7B in debt from Elon Musk’s Twitter buyout until early 2023, pending a clearer business plan from Musk — Lenders concede they will struggle to drum up demand until Elon Musk unveils detailed strategy
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