The Strange Case for “TweetBonds”

Photo by Pixabay via Pexels

The troubled Tech giant’s legacy Debt Holds Certain AppEAL

FRANKFURT, GERMANY – Venice has its gondolas. Hong Kong, its junk-rigged transports. But this German financial capital’s great gift to global commerce has been the trade show. The first formal Frankfurter Messe, or Frankfurt Trade Fair, began promptly on the morning of July 11, 1240. That’s when Emperor Frederick II declared all of Frankfurt’s merchants would enjoy Messeprivilegs, or trade fair privileges. Assuming the business class kicked a reasonable cut back up to Der Kaiser, all trades were to be structured fairly. Procedures were protected. Credit could be extended. And Messe Frankfurt became a first-of-its-kind global exchange platform. 

Messe Frankfurt, shown here in 1949, was one of the first engines of free commerce to open after World War II. Not seen in this image, was the damage inflicted on the rest of the city by the roughly 30,000 tons of explosives dropped by allied bombers.

And over the ensuing 800-or-so years, this großvater of all trade shows, has grown to over 2,500 employees, who throw off something like $700 million in annual revenue in over 30 some-odd locations. Over the centuries, most of the rest of German financial structure settled nearby. The European Central Bank, Deutsche Bundesbank, the Frankfurt Stock Exchange, Deutsche Bank, to name just a few, are all within easy walking distance.

Frankfurt boasts one of Europe largest transport hubs. Frankfurt Airport is among the busiest in the world. The city probably has the densest train and automotive infrastructure on the continent.

Messe Frankfurt is essentially what Twitter was supposed to be, but never quite became.

Comparing the troubled social media giant to a time-tested global exchange platform yields a fresh and proper perspective. From the moment Jack Dorsey and his ex-friends started Twitter, back in 2006, it could never match Google’s credibility, nor Facebook’s engagement, nor TikTok’s scale. 

Started back in 1240 AD by royal edict, Messe Frankfurt now features a staff of 2,500, 30 locations, and over $700 million in sales.

A look back over Twitter’s financial performance over that past decade shows how unreasonable it is to expect Elon Musk – or anybody else, for that matter – to remake Twitter into something it never was. 

Since 2012 , the company has officially stated more than $1.2 billion in net losses. A similar $1.9 billion was lost in operating cash flow, when non-operating depreciation and stock-based compensation were backed out. An additional $5.8 billion was lost in free cash when capital expenditures were factored in.

But those losses are just a fraction of the $35.6 billion spent on the purchase of marketable securities. A figure so high that it begs questions about the operational goals of the operation. 

Summing up ten years of operating cash flow performance yields a startling image of just how much money Twitter managed to burn.

Harnessing Twitter’s Credit Risk
This historical perspective makes Twitter a short story indeed: For all the recent drama, this is a company managing its credit risk. 

As the world is flooded with ever growing financial instruments tied to this nominally private company, these debts are popping up in surprisingly interesting nooks and crannies. Build a screen. Enter some search data. You’ll find them. 

Since this is after all, Twitter. Let’s keep it short: Its debts — or TweetBonds, as they are known — are becoming ever more interesting. History shows that out of such chaos comes real value.

Kaiser Frederick would be proud.