Thursday, March 23, 2023

Op-ed: Musk vs. Twitter


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While I strongly support free speech, I question Musk’s motives given his history of using speech to personally profit. 

Story by William Chappell, Contributing Writer

Earlier this month, Elon Musk, Tesla CEO and the world’s richest man, was offered a seat on the board of Twitter. The offer came after Musk had increased his position in the social media company’s stock to 9.1%.

Musk accepted the offer but, over the following weekend, began posting negative tweets about the company’s performance, pointing out celebrities’ lack of engagement and posting polls on potential improvements.

Then, early last week, Musk withdrew his acceptance of the offer to join the board, allowing him to increase his position and potentially initiate a hostile takeover of the company. 

On April 14, that is exactly what he did, offering to buy the company and take it private for $41 billion.

Twitter’s board responded the next day, rejecting the offer and announcing they were instituting a “poison pill” option, that will allow their shares to be diluted if Musk, or another investor, acquires more than 15% of the company.

Now, investors and the public are waiting to see what Musk’s next move will be. Despite his bravado, the truth is that Musk should be wary of moving forward with the hostile takeover bid, poison pill or not.

Even though Musk is the world’s richest man, valued at an eye-watering quarter of a trillion dollars, all but some $3 billion of that is tied up in Tesla and SpaceX stock. That leaves Musk nearly $40 billion light on cash to fund the bid. Musk could sell stock to generate cash, as he did last year when he unloaded $22 billion worth of stock, or borrow against the stock. Still, both of these options would present potential pitfalls. Selling a large block of stock could cause a hit to the stock’s value, while borrowing against his holdings could leave Musk in the unenviable position

of being forced to sell his stock to pay back debtors if the stock were to fall to a certain value.

If Musk wishes to take over Twitter, it will require risking his other companies’ values, which would be a dubious bet. Twitter just marked the sixteenth anniversary of the first tweet in late March. The site has over 200 million daily users. Until the final days of his presidency, former President Donald Trump used the platform as his bully pulpit.

Yet, the company has struggled to capitalize on its strong position. The company continues to operate with small profits and is far less lucrative for “influencers” than Facebook, Instagram or YouTube.

The site is a haven for trolls and conspiracy theorists and has remained largely unchanged over the course of its existence.

It makes sense that Musk and other investors see potential in Twitter. With a change in leadership that was willing to monetize users’ data more or pump up the volume of advertisements, it could become a consistently profitable venture. But it seems as though Musk is equally motivated by notions of championing free speech on the platform.

While I strongly support free speech, I question Musk’s motives given his history of using speech to personally profit. 

There was the infamous offer to take Tesla private for $420 a share, and numerous occasions of hyping up cryptocurrencies, especially bitcoin, since he or Tesla had extensive holdings. Add to this his trolling of politicians and other business leaders, and I wonder if a potential acquisition is more about allowing Musk to turn Twitter into his own fiefdom, clearing the way for further self-serving promotion and unfettered trolling.

While the feasibility of his bid and Twitter’s resistance makes a takeover seems like a long shot, I think Musk has already satisfied his main goal in this whole situation: garnering headlines.

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