The ads may pay for the servers and reduced headcount[1], but there is no way that they pay for servicing the $10B of high-interest debt that the company was saddled with.
[1] Though with the NYT reporting that the American ad revenues was down 80% to $114M/quarter since the acquisition it might not be so obvious.
> American ad revenues was down 80% to $114M/quarter since the acquisition
Debt service was estimated at ~$100m/mo, with the likelihood that rates on some of the debt could increase substantially since the financing was initially booked in mid 2022.
If these numbers are directionally accurate (and they do not report, so we don't know for sure), this thing is probably closer to losing a billion $ annually than to breakeven.
But market rates are well known and well published. CCC class loans were 10% in April 2022 when these deals were likely. So 10% to 15% covers the possible range of loans if you know much about the market.
The higher end of 15% would be possible if the loans were finalized closer to May or June.
There is a big difference from Feb 2022 vs April 2022 though. But we know the rough timeline of Twitters acquisition as well as the rough timeline of when deals were signed. So I'm reasonably confident in an April 2022 deal.
Looks like when he took down the financing, rates would have been in the 12% range. Possible some/all of the debt has been rolled over since then, possibly at higher rates.
Yes, the debt weighs heavily around their neck. If it eventually ends up in bankruptcy, will Elon Musk lose control of his beloved x.com domain name for the second time?
I would imagine that it was set up so that it is rented from Musk (instead of owning* outright), but it's Musk so who knows.
* I know it's still not owned owned but there is still a legal difference between X Corp directly renting x.com (from Verisign) versus leasing x.com by a different owner (maybe Musk, maybe a holding corp) to X Corp.
That's not how a bankruptcy works. In a bankruptcy, the company is owned by the creditors and gets resolved by them. Usually a business will attempt to avoid bankruptcy by filing Chapter 11[1] or similar so they get to propose a plan for restructuring that will pay back the creditors over time, but their actions as debtor in posession are scrutinized by the US trustee to ensure they meet a fiduciary obligation to the debtors, and the debtors can file a court case to appeal both the chap 11 and can try to get the debtor kicked out and a trustee appointed if they aren't acting in their interests.
[1] Though with the NYT reporting that the American ad revenues was down 80% to $114M/quarter since the acquisition it might not be so obvious.