Ok, there’s already a lot that has been said about how negative Twitter has been to TSLA. But I think people are still undestimating just how much worse it can get.
Tesla investors are definitely pissed at this deal. One, it drives Elon’s focus away from Tesla. Two, it forced Elon to sell TSLA. Three, if Twitter can’t shore up its cash flow, Elon will likely have to keep selling TSLA to fund Twitter.
Elon’s erratic behavior is showing more than ever
I used to think that Elon would make Twitter better. Now I’m not sure. His erratic behavior is showing up more than ever.
He cut half of the engineering staff, realized Twitter needed some fired engineers, while trying to cram untested monetization features into production. He’s flip flopping on ideas within hours.
His ideas are half baked. For example, plenty of people got verified as Lebron James, Trump, Nintendo, Jesus, etc. The site is losing its credibility fast which will scare advertisers.
Users are also complaining about obvious bugs and issues. It’s just the beginning.
Worse, people are seeing live how Elon builds products and it’s probably scaring Tesla investors that this is how he does things: half baked ideas, empty promises, erratic.
Twitter’s debt repayment is huge and Elon will have to continue to sell TSLA to fund it
Twitter’s debt payments are around ~$1b/year according to some reports. Elon really needs Twitter to start turning the ship around fast and start becoming profitable. It looks like he’s trying to throw anything at the wall to get Twitter to increase profits asap.
If advertisers continue to pull out, he’s going to have continue to sell his TSLA shares.
He leveraged his Tesla shares to borrow to buy Twitter. If TSLA drops, he’s going to have to provide more collateral or get margin called.
Elon probably doesn’t know how to run a social media company
It’s increasingly looking like Elon does not know how to run a social media company. For example, he’s demanding changes based solely on his opinion instead of running A/B tests to quantify the change. As someone who ran a ton of A/B tests for a product similar to Twitter’s, there can be a lot of unintended consequences when it comes to monetizations. IE. It looks like your change increased revenue by 3% but it drops total revenue by 5% after 2 months.
tldr: Musk desperately orders features in and out. Advertisers pull out or sit on the sidelines. Revenue falls. Musk tries even more desperate things. More advertisers leave. Musk needs to sell more TSLA to fund Twitter experiment.
