Elon Musk Just Bought Twitter. What Changes Should You Expect?
A finance guy on the future of this social media giant.
Author via iStock PHotos
As I write this, various hashtags about the death of Twitter are trending.
Elon pulled it off and bought Twitter for $44 billion. What does this mean for the future? And how did we get here?
I’ve been a long-time investor, user, and student of the platform. Here are my predictions.
How we got here
The board initially rejected his offer and enacted a poison pill strategy, which allowed it to shop around for alternative buyers.
They didn’t find a better buyer. And in the meantime, Musk came forward with his financing solidified via an SEC filing: he had $46.5 billion, including $21 billion in his own equity (cash) and $25.5 billion in debt via Morgan Stanley.
This put the board in a position where they had to take the offer more seriously.
The board has a fiduciary duty: If they don’t act in the best interest of the shareholders, they have liability and could be sued. They could also take tremendous damage to their professional reputation.
Congressional Republicans were already threatening a probe of the transaction given Musk had made such a strong offer.
Upon accepting the offer, Twitter’s board spokesman, Bret Taylor, released a statement, “The Twitter Board conducted a thoughtful and comprehensive process to assess Elon’s proposal with a deliberate focus on value, certainty, and financing. The proposed transaction will deliver a substantial cash premium, and we believe it is the best path forward for Twitter’s stockholders.”
Who is losing their jobs
Everyone on the board will go away. Because Musk is taking ownership, there is no longer a need to represent the public ownership.
Musk will likely appoint another board of advisors. He still needs experts from the field to advise on the future of the company. However, they won’t have the power to take him to task and remove him.
You could foresee a new CEO coming in within the next 12 months, if not much sooner. Other senior managers will likely leave on their own accord or be shown the door. Many will stay.
Why did Elon spend so much?
$44 billion was steep sum to pay for a business has consistently lagged behind expectations.
And yet, while Twitter may not be successful as a business venture compared to competitors like Facebook, it remains absolutely crucial to society.
Twitter is a pillar of every news outlet, politician, celebrity and activist. It is a cultural zeitgeist.
I’ll give you two possibilities for the future: one cynical, and the other more optimistic.
The cynical possibility
He’ll slowly curve the platform to promote Tesla and projects he’s associated with. Trending tweets about unionization efforts at Tesla might will get demoted.
Any topic Elon has a special disgust for might get buried. He’ll be a new media king.
Remember — individuals claiming to be an avatar of free speech are often advocates for free speech they like.
And then he might unban Donald Trump.
Twitter could become a hotspot for hate speech and right-wing extremism. Elon’s acquisition is already being hailed on Fox News and other conservative outlets, and will likely draw more conservative users to the platform.
Also, Elon himself remains a problem. He’s impulsive and crass.
He recently tweeted a sophomoric meme of Bill Gates, comparing him to a pregnant man. It whiffed of playground bullying. His elevated status on the platform could have ramifications for all of Twitter culture.
Yes, Twitter could become even more toxic than it already is.
The optimistic possibility
It would seem naïve to think an egotistical billionaire is buying Twitter all for the cause of altruism.
He has a goal of making money. He knows he can’t let the platform devolve into chaos.
It also seems problematic to let Twitter become a blatant arm of Elon’s own propaganda.
History has proven that owner-run propaganda isn’t the sure result. Jeff Bezos purchased the Washington Post, and that paper still runs plenty of pieces that criticize Amazon. If anything, the publication has improved with new financing and strategy.
For those who worry that Musk will allow disinformation and bullying to run rampant, remember that Musk also despises business regulation. He knows that if Twitter causes public harm, he will only draw the ire of lawmakers.
Bots will decrease. New product features will surely arrive.
Monetization programs will likely improve for creators. He has already made overtures toward removing advertising and imposing various subscription models.
As an investor who bought in and has been riding a wave of up and downs with the platform for years, my wallet was happy with the price I’ll be paid. $54.20 is a price I wouldn’t pay to buy it. So I’m happy to sell at that.
I remain concerned for the future of the platform. I hope Elon doesn’t let it become an abomination.
If history tells us anything about the coming years at Twitter with Elon, there will be plenty of surprises.
CONTRIBUTED BY Sean Kernan.