Explained: Why is Elon Musk interested in Twitter and can he buy from personal wealth?
New York, Apr 15: Mercurial billionaire Elon Musk now says he wants to buy Twitter outright, taking it private to restore its commitment to what he terms "free speech." But his offer, which seemed to fall 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
succeeds?
WHY
IS
MUSK
INTERESTED
IN
TWITTER?
Ostensibly
because
the
service,
he
says,
isn't
living
up
to
its
potential
as
a
"platform
for
free
speech." Musk
insists
that
he's
not
interested
in
making
money
off
Twitter
and
on
Thursday
said
his
motivation
sprang
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 on violence, hate speech or harmful misinformation. Its suspension of Donald Trump angered the former president's followers. Musk has described himself as a "free 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 spoke up about discrimination.
HAS
MUSK
SAID
WHERE
HE
WILL
GET
THE
FUNDS
TO
BUY
TWITTER?
No.
And
his
regulatory
filing
says
the
offer
is
subject
to
"completion
of
anticipated
financing."
During
a
Thursday
on-stage
interview
at
the
TED
2022
conference,
Musk
noted
vaguely
that
he
has
"sufficient
assets"
to
complete
the
deal,
adding:
"I
can
do
it
if
possible."
CAN
HE
JUST
BUY
TWITTER
OUTRIGHT
FROM
HIS
PERSONAL
WEALTH?
Musk
is
the
world's
wealthiest
man,
according
to
Forbes,
with
a
nearly
$265
billion
fortune.
But
much
of
his
money
is
tied
up
in
Tesla
stock
-
he
owns
about
17%
of
the
company,
according
to
FactSet,
which
is
valued
at
more
than
$1
trillion
-
and
SpaceX,
his
privately
held
space
company.
It's unclear how much cash Musk has. "I do think this will be somewhat painful and I'm not sure that I will actually be able to acquire it," Musk said in his Thursday interview. Musk could sell Tesla stock to raise money - which could hurt Tesla's share price - or borrow against his stock holdings. But Forbes notes that he has already used more than half of his Tesla stake as loan collateral.
WOULD
TWITTER
SHAREHOLDERS
BE
HAPPY
WITH
HIS
OFFER?
The
stock
traded
lower
than
the
offer
price
of
$54.20
a
share
Thursday,
suggesting
investors
doubt
the
deal
will
go
through.
The
shares
have
traded
above
$70
in
the
past
12
months
and
peaked
at
$80.75
in
February
2021.
There
has
been
executive
turnover
since
co-founder
Jack
Dorsey's
departure
in
November
left
Twitter
with
a
new
CEO,
Parag
Agrawal,
whose
initial
actions
have
involved
internal
reorganizations.
There have not been any major changes to Twitter, which, despite its outsized influence due to high-profile celebrity and politician posters, as well as a devoted base of journalists, has fewer users than social media rivals like Facebook and TikTok. Musk himself is a huge user, with more than 81 million followers. Dorsey, still a major shareholder, has not indicated what he thinks of Musk's offer. Twitter said only that it will look at the offer. A spokesperson declined to answer if the board will put in place a defense against a hostile takeover known as a "poison pill".
HOW
MIGHT
MUSK
REMAKE
TWITTER?
It's
hard
to
know
with
Musk,
and
even
trying
to
game
out
this
hypothetical
might
be
taking
the
man
too
seriously.
By
saying
Twitter
is
not
living
up
to
its
potential
to
be
a
"platform
for
free
speech,"
he
seems
to
be
saying
he
would
scale
back
content
moderation.
But
he
has
also
called
for
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
making
its
San
Francisco
headquarters
into
a
homeless
shelter.
He
also
seems
to
approve
of
a
button
to
edit
tweets.
WHAT
CONCERNS
DOES
MUSK
AS
AN
OWNER
OF
TWITTER
RAISE?
Social-media
companies
struggle
to
contain
misinformation
and
hate
speech.
Musk,
whose
tweets
can
lead
online
bullies
to
swarm
his
critics
online,
does
not
seem
keen
on
content
moderation.
"Regulators
worldwide
will
be
wincing
at
the
potential
free
speech
implications
should
Musk's
takeover
bid
succeed,"
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 increasingly muddied, and attempts to change Twitter could easily lead to these issues spiraling out of control."
In his talk with Anderson, Musk said that Twitter is " bound by the laws of the country it operates in, so obviously there are some limitations on free speech in the U.S. and of course Twitter would have to abide by those rules." But he said it was "quite dangerous" to have "tweets be mysteriously promoted and demoted" and having a "black-box algorithm."
WHAT
HAPPENS
NEXT?
Twitter
may
hire
bankers
and
advisers
to
help
it
review
the
deal,
said
Third
Bridge
technology,
media
and
telecom
analyst
Scott
Kessler.
And
other
buyers
could
emerge.
"It
seems
that
if
would-be
strategic
and/or
financial
buyers
are
interested
in
Twitter,
they
should
probably
engage
now."
(AP)