Elon Musk's team has contacted investors to try and raise additional capital for his stagnating social media service Twitter.
A representative of Elon Musk contacted Ross Gerber, president and chief executive officer of Gerber Kawasaki Wealth & Investment Management, according to Reuters, about offering additional shares at the same price, $54.20, that Musk paid to take the company private in October.
As per two people familiar with the fundraising effort, Jared Birchall, the managing director of Elon Musk's family office, contacted potential investors this week.
Mr. Gerber claimed that less than $1 million had previously been contributed by his company to support Mr. Musk's acquisition of Twitter, which was finalized in late October at a price of $54.20 per share.
Existing Twitter shareholders would likely lose money if additional equity investments were made. It wasn't immediately possible to determine how much the most recent fundraising effort may have diluted the stock. This week, Mr. Musk sold shares of Tesla Inc. worth more than $3.5 billion. His second round of sales following the acquisition of Twitter Inc. In a three-day period that ended on December 14, Mr. Musk sold nearly 22 million Tesla shares, according to a regulatory disclosure that was made public on Wednesday.
Twitter's ownership by Mr. Musk has had a turbulent start. Mr. Musk claimed last month that Twitter was losing $4 million every single day and had experienced "a massive drop in revenue." Later, he referred to the possibility of bankruptcy.
As part of the acquisition, Twitter incurred debt totaling about $13 billion. According to analysts, this could result in the social media company owing annual interest payments of over $1 billion as opposed to $51 million in 2021. Some Tesla investors are also annoyed by Mr. Musk's focus on Twitter as the company approaches its worst annual stock-price performance in history.
Mr. Gerber stated that while he was reviewing the proposal, he had some concerns regarding the management of Twitter. He continued, "Those things include how long Mr. Musk intended to serve as CEO and any transition plan."
Mr. Musk stated last month that he anticipates hiring a new CEO for Twitter without providing a timetable for when that might occur. Despite wanting more communication, Mr. Gerber, who is also an investor in Mr. Musk's electric car company Tesla Inc., said he wasn't worried about Twitter's performance thus far. "I believe they simply need to be upfront with everyone about what is happening. Not just with Tesla, either," he added.
Recently, a number of Tesla investors, including Mr. Gerber, have voiced their displeasure that Mr. Musk's participation on Twitter might harm the automaker. Over 57% of Tesla's stock has been lost this year.
On Friday, Mr. Musk tweeted that "Tesla is executing better than ever" and that he had earlier that day reviewed the company's Texas plant's production status.
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