Musk Goes Back to Twitter Investors – By Bob Cronin (Newser) / Dec 17, 2022
Proposal for another round of funding again is based on a $44 billion valuation
Elon Musk has made investors an offer they might be able to refuse: Buy more shares of Twitter at $54.20, the price he paid in October when he took over the company—though the billionaire has since conceded he overpaid. A Tesla investor who said he chipped in less than $1 million the first time said he was asked Thursday evening about a second round of funding, also at a $44 billion valuation, Semafor reports. Ross Gerber said he’s thinking about it but wants to know more about what Musk is planning. “One could argue he has created value or destroyed value at Twitter,” Gerber said. “It’s hard to tell at this point.”
Investors contributing to the first round included Andreessen Horowitz, Sequoia Capital, Fidelity, and Larry Ellison, founder of Oracle. In addition, Jack Dorsey, co-founder of Twitter, and Saudi Arabia’s Kingdom Holding Company helped by rolling over their equity stakes. Twitter did not give the investors any financial updates this week or say how much money it wants to raise, per Axios, though it said it wants to wrap up the round by the end of the year—two weeks away. The offer price would appear less attractive than before because, among other issues, Twitter added $13 billion of debt that requires yearly interest payments of about $1 billion, more money than Twitter produced in 2021.
In addition, advertisers are leaving the platform, and just this week, Musk was denounced internationally for suspending the accounts of a bunch of journalists. None of that much matters to certain investors, Matt Levine wrote a year ago in a Bloomberg opinion piece. “The way finance works now is that things are valuable not based on their cash flows but on their proximity to Elon Musk,” Levine said. He tweeted Friday that that appears to still be the case, saying there are equity investors who are “motivated 100% by Elon Musk fandom.”
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