Mercurial billionaire Elon Musk now says he wants to buy Twitter directly and take it private to restore his commitment to what he calls “free speech.” But his offer, which appeared to be falling flat with investors on Thursday, raises as many questions as it answers.
Among them: Is he serious? Can he get the money together? Would a sale make shareholders happy? And what would the social platform look like if he succeeded?
WHY IS MUSK INTERESTED IN TWITTER?
Apparently because the service, he says, does not live up to its potential as a “platform for free speech.” Musk insists he is not interested in making money on Twitter, saying Thursday that his motivation stemmed from the realization that “having a public platform that is maximally trusted and broadly inclusive is extremely important to the future of civilization. . “
Twitter, like other social media platforms, suspends accounts for violating content standards, including about violence, hate speech, or harmful misinformation. Its suspension of Donald Trump angered the former president’s supporters.
Musk has described himself as an “freedom of speech absolutist” – but he has blocked Twitter users who question or disagree with him. Regulators have also accused his car company, Tesla, of retaliating against black workers who talked about discrimination.
HAS MUSK SAID WHERE DOES HE GET MONEY TO BUY TWITTER?
No. And his legislative application says the offer is conditional on “completion of expected funding.”
During a Thursday interview on stage at the TED 2022 conference, Musk vaguely noted that he has “sufficient assets” to complete the deal, adding, “I can do it if possible.”
CAN HE JUST BUY TWITTER COMPLETELY FROM HIS PERSONAL RICHES?
Musk is, according to Forbes, the world’s richest man with a fortune of nearly $ 265 billion. But much of his money is tied up in Tesla shares – he owns about 17% of the company, according to FactSet, which is valued at more than $ 1 trillion – and SpaceX, his privately owned space company. It is unclear how much money Musk has.
“I think it will be something painful and I’m not sure I will actually be able to acquire it,” Musk said in his Thursday interview.
Musk could sell Tesla shares to raise money – which could hurt Tesla’s stock price – or borrow against his stock. But Forbes notes that he has already used more than half of his Tesla share as loan collateral.
WOULD TWITTER SHAREHOLDERS BE CONSIDERED WITH HIS OFFER?
The stock traded lower than the offering price of $ 54.20 per share on Thursday, suggesting investors doubt the trade will go through. The stock has traded above $ 70 for the past 12 months and peaked at $ 80.75 in February 2021.
There has been director turnover since co-founder Jack Dorsey’s departure in November left Twitter with a new CEO, Parag Agrawal, whose initial actions have involved internal reorganisations. There have been no major changes on Twitter, which despite its huge influence due to high-profile celebrities and politician posters as well as a dedicated base of journalists has fewer users than social media rivals like Facebook and TikTok. Musk is itself a major user with more than 81 million followers.
Dorsey, who is still a major shareholder, has not stated what he thinks of Musk’s offer.
Twitter only said it will look at the offer. A spokesman declined to comment on whether the board will impose a defense against a hostile takeover known as a “poison pill.”
HOW CAN MUSK REPEAT TWITTER?
It’s hard to know with Musk, and even trying to play out this hypothetical can be to take the man too seriously. By saying that Twitter does not live up to its potential to be a “platform for free speech”, he seems to be saying that he would scale down content moderation. But he has also urged the company to crack down on spam accounts, which implies more moderation.
He proposed dropping ads from the service – ads are how Twitter makes money – and turning its San Francisco headquarters into a homeless shelter. He also seems to approve a button to edit tweets.
WHICH CONCERNS DOES MUSK AS A OWNER OF TWITTER?
Social media companies struggle to contain misinformation and hate speech. Musk, whose tweets can cause online thugs to swarm its critics online, does not seem keen on content moderation.
“Regulators around the world will be shaken by the potential implications of free speech if Musk’s takeover bid succeeds,” said GlobalData analyst Rachel Foster-Jones. “Musk is clearly serious about promoting free speech for the benefit of democracy, but the line between free speech and hate speech or misinformation is becoming more and more muddy, and attempts to change Twitter can easily lead to these issues getting out of control.”
In his conversation with Anderson, Musk said that Twitter is “bound by the laws of the country in which it operates, so of course there are some restrictions on freedom of expression in the United States, and of course Twitter will have to abide by those rules.” But he said it was “pretty dangerous” to get “tweets being mysteriously promoted and degraded” and to have a “black-box algorithm.”
WHAT HAPPENS NEXT?
Twitter can hire bankers and advisers to help it review the deal, said Third Bridge technology, media and telecom analyst Scott Kessler. And other buyers could show up. “It seems that if potential strategic and / or financial buyers are interested in Twitter, they should probably get involved now.”