The Secret Broker: Weight a tick, what’s Elon up to?

Elon Musk’s Twitter takeover has The Secret Broker pondering the eccentricities – and cost – of social media and, of course, horny elephants.

Despite what you might think, this is not Elon Musk's ‘I'm off to conquer Twitter’ outfit. Picture: Getty Images

After 35 years of stockbroking for some of the biggest houses and investors in Australia and the UK, the Secret Broker is regaling Stockhead readers with his colourful war stories — from the trading floor to the dealer’s desk.

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I have been using Twitter for pretty all of its 16-year lifespan and I really got into it because of the Financial Times.

Instead of having to visit its website and look around for stories, it would publish a story’s headline and a few sentences, one after another.

Thus I was able to scroll down their feed and choose the ones I wanted, so it was much quicker and efficient for me.

I have one Twitter account left with just over 1,000 followers, though I now hate all social media offerings, as they can consume you too much.

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In my early Twitter years I would have multiple accounts with a combined following of around 50,000. One of my accounts was on Australian wine and I would tweet out and get paid in cases of wine.

Well ahead of my time, it had auto feeds built in, so it had fresh content going through it every 10 mins and then the occasional plug from me, with a sexy offer.

Now, it’s all too hard. The Financial Times feed does not match my subscription app, so it’s completely behind a firewall. And my old wine account has literally withered on the vine. I tried to find it for this story but couldn’t.

Now, Elon Musk has taken Twitter private, with an all cash offer, sacked the top brass and implemented himself as the sole director.

How’s that, for a $69 billion outlay? I just wish he was over here though.

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He could have bought Harvey Norman, retired Gerry and stopped all of those annoying inserts that fall out of your paper and make it impossible to roll it up without a special machine needed.

It would have made him an Australian hero, saved 10,000 trees a year from going to landfill and he could have used Twitter as its main advertising medium. And for a tenth of the price, it could now be known as Musk Norman.

Musk is such a weird name, as is Elon. I have never heard of an Elon before but I know a bit about musk at least.

One of the funniest stories I ever read was about an Indian worker strapped in a saddle on the back of an elephant.

Apparently, young male elephants can go on a sexual musk or “musth” – yes that is a word -and there is no stopping them.

In this story, the elephant’s “master” was taken on a 200km journey, which went on for two days non-stop. People had to hang down from trees and dangle food for the poor old rider, so he had something to eat as he couldn’t get off because of the charging animal.

I feel there is some parallel to be drawn between that and Musk’s extended takeover battle for Twitter.

The other weird name in this Twitter takeover is Dorsey. He was the ex CEO and he has not accepted any of Elon’s cash for his 18m shares, which has saved Elon $US792m.

The combination of this strangely named pair is only matched by their looks, at various times.

Obviously Elon has had a bit of a Michael Jackson makeover since his PayPal days and it would appear that he has also had a new thatched roof. This was 22 years ago:

Elon Musk only bought Twitter so he can delete all those photos of his paypal hair. pic.twitter.com/4yKnLoMwI7

— Adam Richard (@adamrichard) April 26, 2022

Ah, the things that money can buy!

Whereas Dorsey has settled comfortably into what has become popularly known on his own microblogging platform as his “Street/Homeless/Evil Wizard” phase:

Twitter is again losing Jack Dorsey, its multitasking, wizard-bearded visionary https://t.co/pLCwnmbjeY

— Vox (@voxdotcom) November 29, 2021

The new company set up by Musk to enable the equity for cash swap was just simply called ‘X’ and X became the sole owner of Twitter on 27th October 2022, with Musk as its sole director.

Banks involved: Morgan Stanley, Bank of America, Barclays, MUFG, Société Générale, Mizuho Bank, and BNP Paribas. And looking at the stats for the deal, they come out like this:

• $20 billion in cash equity from Musk, via cash sales of Tesla holdings
• $7.1 billion in equity from 19 independent investors (into ‘X’)
• $7 billion of senior secured bank loans
• $6 billion in subordinated debt
• $6.25 billion in bank loans to Musk personally, secured by $62.5 billion of his Tesla stock
• Income last quarter was $1.18 billion vs. $1.32 billion
• 237.8 million registered users

Can you imagine the fees involved? And for one man to pull all of this off is quite extraordinary.

You have to take your hat off to him, sit back and really let all those stats sink in.

Now, Musk wants to introduce a $US8 monthly subscription with added benefits, which I can imagine could include a free set of mats for your new Tesla or a reserved seat for your trip to Mars. Looks like you’ll need to cough up for the privilege of the blue tick. And who could possibly live without that?

Ironically, Netflix is going the other way and is going to offer free subscriptions, with annoying adverts (please don’t tell Gerry about this one).

It currently has 233m paying subscribers worldwide and is valued at $US119 billion.

Netflix spends about $17US billion a year on content, whereas Twitter must pay an elephant’s wage of peanuts.

So, that’s Elon’s dilemma. Can he squeeze out more income, as he is going to need it to pay for all of that interest on all of that debt?

And over here we have Mr and Mrs Jones worrying about paying their $1 million mortgage. Elon’s interest bill will come in at over $US1 billion next year alone – and he doesn’t even own a house for all that!

At least they will be able to see the Netflix drama on Elon for free, when it comes out in two years’ time, even if peppered with annoying Harvey Norman ads.

The title will either be ‘What a Twit?’ or ‘Twit a What?’

I guess time will tell.

PS. I have money on Tom Cruise playing Elon, no wig needed.

The Secret Broker can be found on Twitter here @SecretBrokerAU or on email at [e-mail].

Feel free to contact him with your best stock tips and ideas.

This content first appeared onstockhead.com.au

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