Elon Musk can finally say “funding secured” without getting into trouble. In 2018 he angered the SEC by falsely claiming that he was going to delist the firm. On Thursday, his bet on his Twitter became less virtual. But he has also become more risky.

It is studying an offer at $54.20 per share, which values ​​it at about $44 billion. If you add the 5,000 million debt and about 1,000 million in fees, the total rises to about 50,000 million, not counting the cash on the balance sheet. Musk already owns $4 billion in shares, but that leaves a big hole to fill.

Apparently, almost half of that amount – about 21,000 million – comes from Musk himself. And he plans to raise another $12.5 billion by borrowing against his 17% stake in Tesla, which is worth $1 billion in total. And the banks led by Morgan Stanley commit to lending 13,000 million, more than nine times the ebitda of Twitter projected for this year.

Analysts calculate that the network will obtain revenues of 6,000 million next year, with an ebitda margin of 24%. In an optimistic scenario, let’s suppose that revenues grow by 15% per year and the EBITDA margin improves to 30% in a five-year period. If Musk could sell at the same 30+ multiple he’s going to offer, he could triple his money, we reckon. That would be equivalent to an IRR of more than 25%.

These juicy profits could attract buyers of private equity to join Musk. But Twitter’s cash flow is erratic. In 2021, it only made $633 million in cash from operations, but squandered more than $1 billion on capital expenditures. Perhaps Musk could manage the firm better, but if he goes ahead with his ideas to reduce content moderation, advertisers could flee.

Musk may not stay with Twitter, or even do a takeover bid. It could be a joke: his funding documents were signed on the 20th of the fourth month, and 4/20 is a reference to cannabis. Twitter’s advice is yet to comment, and the stock is 14% below bid. Even so, he can already say “secured financing”.