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Elon Musk explores fundraiser option as Twitter’s financial health goes downhill


Elon Musk’s team is now exploring avenues like using as much as USD 3 billion in a new fundraising campaign to help repay some of Twitter’s USD 13 billion debt.

According to the Wall Street Journal report, the tech billionaire’s representatives discussed selling up to USD 3 billion in new Twitter shares in December 2022.

Responding to a question regarding the accuracy of the report, Elon Musk said “no” in a tweet.

The Tesla boss borrowed USD 13 billion to close the Twitter acquisition in October 2022 from a syndicate of banks including Morgan Stanley and Bank of America Corp.

As per the report, Elon Musk’s team has informed the people familiar with Twitter finances that an equity raise, if successful, could be used to pay down an unsecured portion of the debt that carries the highest interest rate within the USD 13 billion loan package.

According to statistics from a research company, advertising spending on Twitter decreased by 71% in December 2022 as prominent businesses cut their marketing expenditures on the micro-blogging platform after Tesla CEO Elon Musk’s takeover.

The latest data from Standard Media Index (SMI) comes as Twitter works to stop the migration of advertisers. To win back advertisers, it has launched several programs, including some free advertisements, easing a restriction on political advertising, and giving businesses more discretion over the placement of their commercials.

Despite these months often being a time of higher ad expenditure as firms advertise their products over the Christmas and New Year holiday season, according to the SMI data, Twitter ad spending in November 2022 decreased by 55% from 2021.

According to estimates from another research firm Pathmatics, most enterprises had halted spending in November, the same month that Elon Musk restored suspended accounts and offered a paid account verification that led to con artists posing as businesses.

According to Pathmatics estimates, 14 of the top 30 Twitter advertisers suspended all advertising on the service when Elon Musk assumed leadership on October 27, 2022.

Elon Musk addressed the problem of businesses halting advertisements in a Twitter Spaces event in November and said he understands if marketers “want to give it a minute.”

However, he had also accused activist groups of pressing advertisers to stop running ads on the micro-blogging platform around the same period. It’s worth mentioning that about 90% of Twitter’s revenue comes from ad sales.

According to information provided by a top Twitter ad executive at a recent staff meeting, the decline in advertising caused Twitter’s fourth-quarter income to decline by around 35% year over year.

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