Musk Becomes Media Baron With Twitter Deal Amid Big Tech Selloff

The social media baron has joined the prestigious club after Elon Musk took $44 billion off Twitter in the same week that investors took hundreds of billions of dollars from big tech speculation.

Musk's long-running acquisition of Twitter, which he began in April but sought to complete in July, is coming to an end after a decade of digital advertising has bolstered the social network powerhouse and sent Silicon Valley stock prices plummeting. . .

When global financial markets collapsed this year, banks were forced to raise $12.5 billion to fund Musk's purchase, in addition to more than $35 billion in debt that investors refused to fund. FT calculation.

Lenders like Morgan Stanley, Bank of America and Barclays were already facing more than $1 billion in losses from Twitter's funding package ahead of this week's big tech speculation. "I don't know how to get rid of some of this debt," said a senior debt banker in New York.

When the bank agreed to partially fund Musk's bid to acquire Twitter, it looked like a lucrative deal that would result in one of the largest leveraged buys in history. Many banks are rushing to provide financing to strengthen their ties with the world's richest people.

But Wall Street's debt machine has been bogged down since negotiations began on Musk's Twitter account six months ago, and bankers say lenders need to make deep concessions to shed risky debt linked to the deal.

Soaring inflation and rising cost of living took place in Silicon Valley this week, as Big Tech reported a sudden slowdown in its key profit drivers. Amazon, Alphabet, Meta and Microsoft all lost nearly $1 billion of their market value during this week's lows, with only Apple bucking the downtrend.

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Investors have penalized parent companies Facebook and Google for what many see as encouragement to employees and long-term research, such as Mark Zuckerberg's "Metaverse" initiative.

"The big story here is that big tech companies can't control their costs," said David Alder, a €33.2 billion equity manager with positions at Amazon, Microsoft and Google. "These mega-cap tech companies are talking about adjusting their costs and closing macro gaps, but they're not doing it."

Musk has promised to use Twitter to cut jobs and costs while encouraging product innovation.

In Las Vegas, some of the world's tech investors gathered at Encore Encore at the Wynn Resort for private internet company Goldman Sachs' conference.

One attendee told the FT that the vote at the meeting, attended by Yuri Milner's main investor in DST and growth stock General Atlantic, was a funeral.

"People are realizing that some of the companies they invest in aren't coming back anytime soon," said one attendee.

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