Twitter raider and Tesla founder Elon Musk might not be the world’s richest man for long. What’s the scam?
The scam is debt, or “leverage” as they call it in financial markets. Neither Tesla or Twitter make much of a profit. Both have enormous debt and Musk has to service that debt as interest rates rise while trying to work out how to monetise both companies.
The incredible success of Tesla meanwhile is about to be sorely tested. This is a company that has yet to face competition but the established car makers in Europe, Japan, Korea and China are about to hit the market for electric cars, with all their distribution, marketing and engineering expertise. In the words of Australia’s top auto journalist, John Cadogan, “Tesla is doomed“.
Meanwhile, Musk’s Twitter foray has already cost him billions after he forked out $US44bn to buy it with other people’s money then discovered just how fragile is the online ecosystem. He sacked thousands to get costs down and whacked an $8 charge on Twitter’s “blue tick” users which hilariously led to pranksters buying blue ticks, impersonating the likes of drug company Eli Lilly and weapons maker Lockheed Martin, wiping billions off their share prices.
Twitter is now in danger of a mass exodus of users to other chat forums. It is all about free speech and authenticity. If Musk tampers too much to monetise it he will kill Twitter quickly. He’s already damaged it, perhaps not beyond repair just yet. The question is, will Tesla go first? Much of the value in this company is put down to Musk himself and brand Musk has just taken a battering at the worst possible moment for the billionaire, the moment when the world’s car makers are rolling out their EVs.
Suddenly there is competition on both fronts, and debt on both fronts.
UPDATE—Just learned that Eli Lilly executives are raging and furious at losing $20 billion in market cap from this stunt with @TwitterBlue. It’s too bad they don’t see their own damn insulin price gouging as the actual problem. Karma @LillyPad, karma. pic.twitter.com/AzXRpMH8mi
— Eric Feigl-Ding (@DrEricDing) November 11, 2022
Michael West established Michael West Media in 2016 to focus on journalism of high public interest, particularly the rising power of corporations over democracy. West was formerly a journalist and editor with Fairfax newspapers, a columnist for News Corp and even, once, a stockbroker.