the logic used in this article makes for some reasonably sound logic. And if it’s truly confirmed that Ackman / Pershing square’s SPARC is involved, you can bet it ii because Ackman wants to IPO it … and Ackman’s comments seem to hint it has his interest.

Might be a good, potential opportunity to keep an eye on …. could be huge. Or it could end up being another Coinbase, …. huge IPO day, then pulled back sharply, and hasn’t really recovered since then.

quote:
Most of the financial groundwork for analysis already exists. In summary, Elon paid $44 billion for the platform. Current valuations are around $15 billion. Current debt service is $1.5 billion/yr (roughly $100m/mo). Current expenses include $100m/yr AWS, $100m/yr Goog cloud (both contracts), +payroll and misc.

Approximately 9 months ago, Musk had $1 billion in cash reserve for Twitter. The burn rate deficit was roughly $100m/month. That put timeline estimates for an inflection point on/around October 2023. It is now October 2023.

Approximately a week ago, Twitter CEO Linda Yaccarino made a bold statement. Yaccarino stated that from her review of the current status, Twitter would start to turn a profit in the first quarter of 2024 {link}. However, with $100 million per month in debt service alone, this statement seemed too far of a stretch. At pre-musk levels of revenue, maybe; but that $1.5 billion debt service is a heavy nut to carry.

Timing – Remember, it’s October. Last Friday, the Securities and Exchange Commission (SEC) gave special regulatory approval to Bill Ackman’s firm, Pershing Square (hedge fund), for a new investment vessel called SPARC, whose purpose is to invest in private companies in order to take them public. As noted by CNBC, “In a SPARC, investors will know what company the financing vehicle would be used to merge with before they have to pledge their investments.” The financial mechanism avoids some of the issues with typical IPO’s. •It’s October, inflection time.

Yaccarino says a strategy is underway for profitability in Q1 2024.
Ackman gets SPARC approval, and then suddenly:

[…] “The answer is I have a lot of respect for Musk. I think Twitter is a really important platform,” Ackman told CNBC. “I think he’s made tremendous improvements to the platform, and I think it’s a unique, very difficult-to-disrupt, kind of asset and one that could grow.” […]

Though Musk hasn’t expressed any interest in working with Ackman to take X public, and despite the $13 billion in debt tacked to the company, Ackman has worked out a loose plan to make it happen, if Musk were interested.

“What’s interesting here is we could commit $2 billion to a transaction, set the rights price to $121 million, set it at $100 a share and announce a transaction,” he said. “And then we tell the story and then the rights holders have a chance to decide whether to invest. As long as the rights have positive value, they’re all going to get exercised, and the IPO raises $13 billion.” (read more)

The heavy nut disappears. Investors roll the debt into discounted shares of stock. If Ackman can generate a $17-$20 billion outcome for Twitter, Musk nets $5b and retains 20-25% of shares. Yaccarino gets well compensated. It’s a win/win/win.