Now that Elon Musk has bought Twitter - now the Pit edition (Part 1)

The BBQ Pit
1461

Thanks for this, I truly appreciate it.

Glad to see my quick and dirty calculation as to the avg pay per employee was 97% correct. From the article:

However, I WAY underestimated how many people were remaining at Twitter - I said 1,000, the reported number is 2,700.

My post above was based on Twitter’s last annual report (the 10k, for FY2021), the WSJ is based on their last quarterly report (8K, for Q2 FY2022), so the WSJ does contain fresher numbers.)

Interesting to see that Twitter burned through 35% of its cash in the quarter of the merger announcement. I’m sure the two things are completely unrelated. :wink:

Let’s take a look:

Imgur

One thing leaps out at me: Twitter bought $2 billion of common stock in the first 6 months of 2022, which is pretty much the entire cash drop ($4.1b to $2.7b).

Which is odd, right? Twitter is getting bought, why are they buying their own shares off the common market?

Two reasons I can think of:

  1. Part of the merger agreement forces Twitter to spend $X or X% of their cash to buy and retire a certain # or % of shares outstanding. Not too sure why this would be done other than tax reasons. (If Twitter doesn’t buy the shares, Elon must buy them, increasing his debt load. However, Twitter has $1.5 billion in extra cash to pay this down, so it kinda washes out.)

  2. However, we know that Elon did this deal without performing due diligence.

(For those of you who don’t track this stuff, “due diligence” is when you get your team of high-priced analysts and lawyers and spend a few weeks pouring over the corporate financials and contracts. Elon did not do this. He just bought the company and legally waived due diligence!)

Which leads us to an interesting possibility…

Now, I don’t know what the provisions were in the buyout agreement re: treasury stock (stock owned by the company), but if Musk was as sloppy there as he was about… :waves hands around: … then he may have paid full price for treasury stock as opposed to having the stock retired. (If he had Twitter retire all Treasury stock as a condition of the agreement, Musk does not have to buy it, thereby decreasing the eventual purchase price).

Twitter executives (who are people too)… in the “Musk didn’t retire treasury stock” scenario… realizing this mistake, spends $2b on stock, knowing full well that Elon would have to spend $3 billion to acquire it, $3 billion which ends up in Twitters cash pile.

Now this doesn’t really do anything to Musk (he would have bought this stock on the open market on the close date), but it is a smart maneuver by Twitter’s executives who still had their fiduciary duties to consider. Twitter (the company) is $1 billion richer. Elon (the dumbass) is $3 billion poorer. Win-win!

1462

And that article conflates median and average in one sentence - the average is certainly going to be higher than the median…

1463

Moderating:

This is IMHO, not the pit. Don’t attack other posters.

1464

The sackings will continue until productivity improves:

I suppose there’s a case for sacking the ad-sales department – what reputable company is going to buy ads on 4chan Mark 2?

1465

Wow, I can’t ever imagine a billionaire stiffing creditors. Sad! :exploding_head:

1466

Stranger

1467

Someone might argue that $100 billion disappearing this quickly is a sign that value never really existed and was just an inflated number on a spreadsheet.

1468

Giving credit where credit is due, congratulations to Elon for making the worst song of the Seventies even worse:

1469

Obviously I don’t know how Twitter did this, but at two Fortune 50 companies I’ve worked for my travel was paid for with a corporate card- IN MY NAME. This was done to ensure that one did expenses etc. on time, as I was personally responsible for the bill if it were to be unpaid. Now, this was never an issue so long as you did your expenses on time. I did once see a bill go unpaid due to a boss being lazy about approving a report, and in that case the employee (me) was allowed to expense the late fee. In another case, however, an employee (not me) who was late to complete expenses had to eat the late fee.

Point is, I wonder how Twitter does this. Because it could get very interesting if they leave former employees holding the bag for credit card bills.

ETA: For clarity, the expense system (concur in both cases) tied directly into the credit card (Amex, in both cases) and paid via transmittal. No need to get paid back or forward a check.

1470

Yeah–and the “Engineers must report to HQ tomorrow in person” schtick must have been pretty expensive. Next-day plane tickets aren’t cheap. It’s unclear to me how many people were frog-marched that way, but sounded like triple digits at least.

1471

Once again, the classic Office Space has anticipated Muskian management, in the following conversation:

Peter: “I don’t like my job. I don’t think I’m going to go anymore.”
Joanna: “So what are you going to do for money? How are you going to pay your bills?”
Peter: “You know, I don’t like paying bills. I don’t think I’m going to that, either.”

:smiley:

1472

Yeah, this is a good point…I’ve had a company credit card in my name as well, which I would pay and then submit for reimbursement.

Meanwhile, over a third of Twitter’s advertisers have fallen silent. A little less than I actually might have expected.

1473

I imagine that many other advertisers are taking a “wait and see” approach. And I imagine that before too long, they will see (the doom that hangs over Twitter).

1474

An interesting question about advertisers is how much is prepaid on what sort of lead-time?

E.g. If I’m Brand X and my ad spend at Twitter is already spent & programmed / scheduled / whatever is the term through the end of Dec, I might choose to stay quiet right now about my plans even though I’ve already decided I’m not planning to renew for Jan.

Also what sort of contractual terms are common in the industry? DO advertisers sign a 1-year contract that’s hard to get out of? Or is it more month to month with termination at will?

I just have no idea how the ad game commonly runs contractually.

1475

Ha! I had an AmEx card like that, and that arrangement ensured no such thing. Being a techno-nerd, I was focused on the fun stuff and often let my expense reports lag way, way behind. Things got especially tense when I submitted a huge batch of expenses for the previous fiscal year after the start of a new one. Fortunately for me, I wasn’t the only one, and there was only a limited amount of chewing-out to go around, so it all blew over. :smiley:

1476

Yeah, I was wondering about that myself. If you’re added to a someone else’s credit card account as an authorized signer, and you receive a card with your name on it, that doesn’t make you legally responsible for paying the bill. Parents do this for their kids all the time, and the kids aren’t on the hook if the parents decide not to pay the bill.

I think in order to be held legally responsible for the bill, you would have to sign an agreement directly with the credit card company, and pass their credit checks and everything. You would also have to sign something making the company NOT responsible for your bill. At that that point the “company card” is just one of your credit cards, it’s not a company card anymore,

If the company wants you to be on the hook for your expenses if you don’t submit a report in a timely matter, it seems to me that they would just have you pay for your expenses with your own card and submit documentation for reimbursement. I don’t see any reason to have a company card if you’re responsible for paying the cc company.

Now maybe the company has a policy where they will deduct the cc charges from your pay if you don’t submit expense reports, and they used the “authorized signer” sub accounts ( each card will have a different number, even though they are billed to same account) to track expenses- but that’s not the same as requiring the employee to directly pay the bill to the cc company.

1477

That’s correct, at least in the company that I worked for. The company was basically the guarantor for the employee’s AmEx card, so everyone who traveled was automatically issued one as part of their employment with no personal credit requirements. Actually, at some time prior to my joining the company, employees had AmEx cards that were billed directly to the company, but apparently there were a few too many questionable (ab)uses so they instituted the new system. You still weren’t supposed to charge non-business things on the corporate card, though.

1478

I am fully aware that this is not the pit.
However, @Stranger_On_A_Train has been remarkably absent from this thread, after having been rebutted by numerous posters. Of course, he has no obligation to return, or to answer.
So I post this only to point out that after a barrage of posts, he has decided to remain silent.

1479

Modding: He posted 3 hours ago. This looks like you’re trying to taunt another user. Please refrain from such in the future. As you stated, this is not the Pit.

1480

I read something a couple of weeks ago that the lead-up to Musk’s takeover happened to coincide with a (quarterly?) ad-buying commitment window, and Musk’s erratic behavior in this period led a number of regular advertisers to delay their commitment until the situation became clearer. This was in the context of noting that Musk started his reign already running behind the pre-existing revenue situation because advertiser commitment was lower than usual. Which means the current exodus is only in part a cancellation of active contracts, and another part a firming-up of earlier hesitation.

Unfortunately I can’t relocate the article I read before. Googling news on Twitter that’s more than a few days old is really hard, given the avalanche of developments and analysis that comes out every day. So because I can’t find the article, I’ll allow that I could be misremembering, or that it’s a low-quality speculative cite with soft sourcing.

It makes sense, but I can’t say much more than that.