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, take advantage of that 60 off coupon code. uh, it's a Black Friday coupon. Best pricing we've got. Okay, if you've got questions, send us an email Kevin.com Do know though that uh, it's the weekend, so we're a little slower replying on the weekends. but anyway, uh, or just buy the courses using the coupon code because they're freaking awesome. But if you have questions about like a custom bundle or whatever you could join Over Uh, send us 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.