Well, he did say that he didn't care about the economics.
Last month during a TED appearance, Tesla (TSLA) CEO Elon Musk said that his bid to acquire Twitter (TWTR) was "not a way to make money."
"I don't care about the economics at all," he said
That may be for the best, because so far the economics haven't been looking especially healthy.
On April 13, one day before Musk made his $44 billion bid to buy the microblogging site, shares of the electric vehicle maker were selling for $1,022.37.
On May 12, Tesla shares hit an 8-month low, briefly slipping below $700 a share, as the company contends with problems at its Shanghai facility and a crumbling stock market.
Twitter shares were going for $45.08 recently, well below the $54.20 a share that Musk offered.
The world's richest man, who has described Twitter as a "de facto town square," owns 9.2% of the company.
"Without the huge amount of wealth provided by Tesla's overvalued stock, Musk is considerably less wealthy and has less resources to act on his strategies," said David Trainer, CEO of the investment firm New Constructs.
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A Death Spiral?
Trainer, who has described Musk as a "modern day snake oil salesman," said that given the difference between $54.20 and Twitter's current stock price, the market is signaling that the deal will not get done at $54.20.
"Perhaps Twitter is forced to accept a lower price and Musk will need to spend less money, but now, given Tesla's falling stock, he has less money," he said.
This spiral, Trainer added, "could become a death spiral for the deal - not dissimilar to the death spiral we are seeing in Terra/LUNA" cryptocurrency meltdown.
"As markets reset and reconcile to fundamentals, the speculative forces artificially boosting stocks are waning," he said. "This trend changes the calculus on any deals that get done going forward."
George Geis, law professor at the University of Virginia, said "the deal is a fun one to watch because the terms keep changing."
"I understand that Elon Musk’s team is now seeking to raise perhaps $6 billion in preferred stock so that he can avoid borrowing against some of his Tesla stock," he said.
"But that would still leave a big equity contribution to be made, maybe $20 billion under the current structure, so he would seemingly still need to sell a lot of Tesla stock."
'He Wants This Company'
Geis noted that the deal breakup fee is only $1 billion, and Twitter’s price has held fairly steady even as the Nasdaq keeps plummeting.
"Some say Twitter is only being held up by the Musk bid and could free-fall if he walks away," he said.
"It’s always dangerous to make predictions about what Elon Musk will do," Geis said.
"But I think he’ll try to bring in some money to syndicate his equity commitment, renegotiate a lower deal price, even if it means paying the $1 billion he could come out far ahead, and executing on a new deal," he said.
"He wants this company."
Musk is looking to secure financing for the deal and a total of 19 companies have committed roughly $7.1 billion to assist him in his quest to take over Twitter.
This includes Binance, the world's largest crypto exchange by trading volume, which signed on as an equity investor in Musk's takeover bid, which is pouring $500 million to support the effort.
Analyst at Hindenburg Research, which is shorting Twitter stock, said in a research report that, overall, "we are supportive of Musk’s efforts to take Twitter private and see a significant chance the deal will close at a lower price."
"A lower deal price with less excessive leverage will place both Twitter and Tesla on more solid financial footing," Hindenburg said.
'Risks to Both Enterprises'
Placing both Twitter, and ultimately Tesla’s future on a foundation of further equity-backed margin loans, the report said, "or potentially more sales of Tesla equity amidst a volatile market, adds risk to both enterprises."
A Musk takeover of Twitter could be costly, according to a recent report by time2play, which found that 16.3% of users surveyed said they would leave the platform entirely if the acquisition is finalized.
Such an exodus could cost the the outlet $828 million, the report said, based on 2021 revenue reports.
"Musk has called for Twitter to add an edit button and to eliminate the scourge of bots on the platform; moves which, in theory, would receive universal acclaim," the report said. "Still, a vocal cohort of Twitter users fear the Tesla chief has more nefarious plans."
Musk has also said he would reverse the ban on former President Donald Trump, who was booted off the site following the Jan. 6, 2021 insurrection, "due to the risk of further incitement of violence."
Bringing Trump back to Twitter would drive 24.2% of users to head for the exits, time2play said.
Trump's own bid to be reinstated ran aground earlier this month when a federal judge dismissed the former president's lawsuit seeking to overturn the ban.
