Inside Twitter, employees told me today, there’s a mood of exhaustion. Rank-and-file staffers have little to no faith in the board, or in CEO Parag Agrawal, whose moves yesterday to fire the company’s highly respected heads of product and revenue look even more erratic.Casey Newton reporting
The wrong guys got fired. Instead of an overmatched CEO, Parag Agarwal, Kayvon Beykpour (product lead), and Bruce Falck (revenue lead) got shown the door because CEO wanted to take the company in a new direction. I would have shown the big honcho the door. But again, the board is quite feckless. (Read: Musk or not, Twitter CEO has to go.)
Except for the CEO, no one in the company believes that firing these two executives was a good decision. Kayvon, who co-founded Periscope, was well regarded in the company and helped wrangle a good product strategy for the company. The palace intrigue is coming at a time when Elon Musk is once again turning Twitter into his pet pinata. What many see as waffling or wobbling is just a technique to get a better deal for Twitter.
The market meltdown has made Twitter less valuable.
In a research note about Twitter, Hinderberg Research which is short Twitter stock pointed out that Nasdaq is down about “~17.6%, implying a Twitter price of ~$31.40 per share without a deal.”
Musk knows that, and he also knows that there isn’t another buyer. So, this is a good chance for him to get the asset for cheaper and loaded with less debt.
The current deal for Twitter will be funded by $20.1 billion in equity from Elon, $7.1 billion from other investors, and the remainder of $19.25 billion via debt. It makes sense for Elon to lower the leverage — about 8.6 times EBIDTA per a Wall Street Journal report. More debt means the more difficult it will be for Twitter to become a more robust business that doesn’t rely on advertising — a stated goal for Musk.
He also knows no one with real skin in the game is in charge of Twitter. The board (apart from Jack Dorsey’s 2.4 percent) owns less than 0.2 percent of the company and is weak. And the CEO is out of his depth.
As someone wise once said — you don’t get to be rich or stay rich by spending your money, and you do it by getting a better deal.
May 13, 2022. San Francisco