The Elon Musk Bankruptcy.

everyone me Kevin here is a Twitter

actually going to go bankrupt well I've

done some numbers I've looked at the

debt I've looked at the incomes and I

want to give you some of my thoughts on

whether or not it would actually make

sense to file for a chapter 11

bankruptcy so first of all I want you to

think about the money Elon just saved by

firing 3 750 people well it's not the

you know the best thing to do

politically and it definitely has led to

some canceled advertising contracts

consider this if the average employee at

Twitter makes about a hundred thousand

dollars you wanna add 30 of that for

workers comp insurances liability

training paid days off paid vacation

sick time doctors insurances uh stock

comp whatever all of that easy 30 ad

right so you add 30 multiply that by

3750 just by cutting those jobs

Twitter's probably saved half a billion

dollars which that sounds like a lot

because Twitter was basically Break Even

nearly Break Even tiny little loss in Q2

uh that's the last financial report we

have but what's interesting is uh

Twitter's debt has skyrocketed and I

think that's what's motivating Elon Musk

going well dang it we were bankrupt back

when our interest expenses were about a

hundred million dollars a year now

because I borrowed 13 billion dollars to

buy this company uh and we're losing

potentially four million dollars per a

day which is somewhere around 120

million dollars per month which is

potentially a loss of somewhere around

1.4 billion dollars per year when you

add those things together all of a

sudden Twitter doesn't look that

profitable right these losses which

probably Encompass the debt yeah

Twitter's probably somewhere losing

around one and a half billion dollars a

year now obviously the employee layoff

aspect helps but that probably I mean

Elon suggesting four thousand dollars in

losses per day uh either before or after

the employee layoffs would make a

difference of about 500 mil right half a

billion dollars it's a lot but it means

they're either burning one and a half or

two billion dollars I'm gonna guess Elon

was talking about this four thousand

dollar per day loss before the layoffs

let's assume that so that puts us at

about one and a half million uh one and

a half billion dollars of annual losses

over at Twitter uh and again they're

spending a ton of money on debt and the

higher interest rates go the more they

have to pay because these are a lot of

these are variable debts Twitter and

their last report in June had 2.68

billion dollars in cash they had 3.4

billion dollars in short-term

Investments those treasuries could have

gone up in value if those are treasuries

so that puts them at about six billion

dollars which is really convenient math

because that gives them about a four

year Runway rate as long as they have

relatively stable income now if their

income Falls 25 because one in four

advertisers are like buy or it's a

recession and their income Falls they'd

have a three-year run rate at the

current burn level which is kind of

interesting so I think this idea that

you know the bankruptcy a chapter 11

reorganization bankruptcy for Twitter is

imminent I don't think is actually very

likely I think it's like I mentioned in

my last video I think it's a tool I

think politically it helps Elon Musk be

able to justify all of the 35 750 people

he just laid off look Disney's laying

off people uh I mean I don't have to go

through the list almost every company is

either freezing hiring or laying off

people we're seeing the same thing

happen in logistics now as well which

suggests a big drop in consumer

discretionary demand I mean Trucking uh

Freight demand is dropping off a cliff

it's insane some people in the industry

are like this is the worst I've ever

seen it so it's scary and it's actually

all designed by the Federal Reserve

they're trying to purposely slow

everything down but mentioning

bankruptcy as a possibility is

definitely politically motivated I think

for Elon Musk who's suggesting

bankruptcy tells advertisers all right

well I mean look they were going to go

bankrupt if they didn't lay people off

right it gives people an excuse to still

be associated with Twitter obviously

there's been a lot of other drama going

on with the check mark and the official

and the impersonation stuff look there

are going to be mistakes as Elon Musk

has put it there will be mistakes but

again they could survive for three years

roughly based on my estimates with the

money and debts that they have the issue

really becomes leaning out and now

create making a more profitable product

and so I think Elon a second reason for

suggesting bankruptcy is trying to

motivate existing workers motivate

people to work hard one of the issues

they're facing now is the FTC is

investigating them and they've got a lot

of employees who are fearful that

they're going to go to jail and their

corporate Council has come out via

internal memos and suggested to the

internal uh Workforce look when you're

working for a corporation it's the

corporation that's legally liable for

actions now I don't know that that's

necessarily always true because if

you're a fraud and you're doing things

intentionally wrong I would suggest the

core bail will only protect you so far

but generally if you are an employee

this is true anything employees do is

the responsibility of the corporation an

employee messes up it's the

responsibility of the corporation so

it's true but it shows you some of that

internal strife that you're seeing I

mean you just saw the chief of their

compliance Department dip out uh y'all

Roth which was really it really came as

a shocker because he's been on uh on the

spaces with Elon Musk he's almost

sounded like elon's right-hand man over

at Twitter so it's a little bit shocking

a lot of drama going on about bankruptcy

but another thing to remember about a

chapter 11 is the chapter 11 first of

all is not chapter seven liquidation

chapter 7 liquidation is like Toys R Us

like you're closing your doors or Gone

chapter 11 is what you do when you want

to reduce your debts but the problem

with that is Judges usually take Equity

as well and it's possible that even

though Elon Musk has control of Twitter

now if he actually went through a

chapter 11 bankruptcy a reorganization

he would probably lose control of

Twitter and I don't expect that's his

goal I think his goal is to make sure he

maintains control of Twitter between a

now and some future point of

profitability you know he's been memeing

he's like he says he used to be made fun

of for uh because he started at PayPal

right he used to be made fun of as the

internet man who wants to get into

rockets and cars now he's being made fun

of the rocket and car man who wants to

get into the internet uh and so I mean I

have a lot of faith in uh Elon obviously

I think most people know that I'm a fan

I think there are definitely a lot of

mistakes being made some of them really

really avoidable uh you know I don't

think he should be moderating politics

himself as Chief to it but the odds of

bankruptcy I think are relatively low at

least for the next three years and quite

frankly in even a year and a half time

from now I expect uh interest rates to

be lower uh the their interest expense

could be lower they could actually take

whatever Revenue they have and

potentially use that to pay down debt

much like the oil companies are doing

right now I mean yesterday in the course

member live stream we were to actually

the day before yesterday we were doing

an analysis on the balance sheet of some

of the uh the oil companies which do

keep in mind that you could take that

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an email anyway uh so we were looking at

the oil companies and they're throwing

almost all of their extra cash flow

they're they're positive cash flow after

positive net income they're throwing

almost all of it into stock BuyBacks and

a loan pay down and it's really smart I

mean the cruise lines like Royal

Caribbean we looked at them they're

losing like four million dollars a day

just in interest they need to pay down

but the problem is they it's gonna take

them years to pay this stuff down the

oil companies they could actually be at

very low levels of debt I wouldn't say

they're going to pay off all their debt

because then you lose some of the

leverage and oil companies want uh as do

many companies want to use some leverage

right but the The Debt Pay down rates

are great right now and they'll probably

be super low debt by 2024 over this next

year here and oil prices will probably

hold up so really really remarkable

obviously we've got a lot of enthusiasm

for the macro cycle turning positive

that's going to be a big help for Elon

because we know he well overpaid this is

probably a 15 stock that he paid to

54.24 so you know even even tripling on

an IPO in two or three years is just

going to put it back to where it was

potentially so uh we'll see what ends up

happening I'm optimistic I'm not

invested I had one share of Twitter I

actually don't know what's happened to

that but I probably got liquidated at

54.20. anyway my thoughts Izzy going

bankrupt no is it a good political tool

yes three year run rate even that's with

25 advertisers cutting do know if uh if

we saw 75 percent of advertisers cutting

you could be down to a one year run rate

right because then you're going to blow

through those marketable Securities and

remember those numbers are from June so

they could have already burned through

some of that uh over the last three

months while they were going through the

process of acquisition so we'll see a

lot of really loud people shouting over

here but uh hopefully uh you can hear

the audio just fine thanks so much for

watching check out the programs on

building your wealth link down below and

we'll see in the next one bye