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Exciting Twitter “war” – Elon Musk

Elon Musk’s ambitions with Twitter and the social media industry

Billionaire Elon Musk’s offer to buy Twitter is considered a rather unexpected decision from a business perspective. This company is not a big name in the field of social networking in the US and the world, with a daily regular user (DAU) of only about 200 million. For comparison, the biggest name is Facebook with a daily user count (DAU) of up to 1.93 billion. In the last quarter, revenue from advertising, Twitter’s main source of revenue, was only one-fifth that of Google’s YouTube video platform.

Exciting Twitter

Twitter has a relatively low number of regular users compared to other major social networks (Source: Oberlo)

The world’s richest billionaire himself also admits that making money is not his main goal with this deal. In an offer to the Twitter Board of Directors, Mr. Elon Musk said: “I invest in Twitter because I believe in its potential to become a global free speech platform… I realize that the company would not be able to grow and serve this goal with the current structure. Twitter needs to be transformed into a private company.”

Speaking during the TED 2022 conference in Vancouver, Mr. Musk also reiterated his points: “My strong intuition believes that a community platform with maximum trust and high inclusivity is particularly important. important to the future of our civilization”.

Regarding his vision if successfully acquiring Twitter, the CEO of Tesla said that he would turn Twitter’s algorithm into open source, public on platforms like Github, so that Internet users can participate in analysis and search. understand, evaluate problems, and suggest solutions. He also wants Twitter’s content moderation policy to be more cautious and “tolerant”: “We need to be very cautious when deciding to remove something, and be extremely careful with permanently locking our accounts. clause – a temporary suspension is a better measure”.

Exciting Twitter

The post editing feature was tested by Twitter after Elon Musk’s suggestion (Source: CNBC)

In fact, before making the offer to take over Twitter, billionaire Elon Musk – as the largest shareholder of this company, has repeatedly made proposals to change the way the company operates. One of these has been reviewed, which is the first test of a feature that allows to edit posts. Other proposals include removing ads entirely for users of the paid service Twitter Blue, and allowing them to pay fees in Dogecoin — though Musk later deleted the post calling for these features.

Technology site Recode commented that, although it doesn’t make as much money as Facebook or Youtube, Twitter has a great social influence, especially in the US, where the platform is seen as a “playground of the elite”. “. Prominent names such as former US President Donald Trump or Elon Musk himself, all use Twitter to create a huge impact on the public, regardless of whether the messages they give are positive or negative. pole.

Exciting Twitter

Many figures like former President Trump previously exerted great influence through Twitter (Source: CNBC)

Therefore, Elon Musk’s takeover of Twitter, if successful, will be a big push in expanding his influence and shaping the vision of this billionaire on society. Previously, former President Trump also collaborated to build a private social network called “Truth”, to challenge today’s big names. But this young name is certainly difficult to compare with Twitter at this time. Mr. Musk ended the offer with a confident statement: “Twitter has great potential. And I’ll be the one to unlock them.”

How did the market and Twitter react to Elon Musk’s offer?

After Elon Musk announced that he had completed buying more than 9% of Twitter shares, the market welcomed this news quite positively, pushing this social network stock up 27% during the session. In contrast, Twitter stock lost 1.7% of its value after the takeover offer was made – suggesting that the market is much more cautious.

Exciting Twitter

The stock market is skeptical of Elon Musk’s offer to take over Twitter (Source: CNN)

Financial services firm Stifel downgraded the stock, with the somewhat sarcastic comment that “The company has become an Elon Musk circus”. Mizuho Bank said that Twitter’s board of directors will soon reject this offer because of too big differences in business philosophies between the two sides. Another reason for concern from Twitter is that “Mr Musk will have very little time to focus on Twitter while also running a series of other technology companies, including Tesla and SpaceX.” .

On the Twitter side, the offer from Elon Musk is clearly the focus of the attention of both management and employees. CEO Parag Agrawal acknowledged “there are many distractions to come” in a message to staff. Many of the company’s employees are also quite worried, when the management has no answer about how Elon Musk’s acquisition plan may affect their operations.

Another fact is that even though Elon Musk is the largest shareholder, he will have to face many other large shareholders if he wants to control Twitter, including investment giants such as Vanguard fund and BlackRock. One of the major shareholders who voiced their objections was Saudi Prince Alwaleed bin Talal and the Kingdom fund he owned. He also increased his stake in Twitter to 5.2%.

Exciting Twitter

Prince Alwaleed of Saudi Arabia – a major shareholder of Twitter publicly opposes the takeover offer (Source: Twitter @Alwaleed_Talal)

After much speculation from the media, in the latest move, Twitter’s leadership has finally accepted the option commonly known as the “poison pill”. With this plan, within the next 1 year, if any outside shareholder buys more than 15% of the shares, other Twitter shareholders will be able to buy more shares at a discounted price, helping to “mix up”. dilution” of the takeover effect.

This is considered an action to directly respond to the takeover offer from Elon Musk. The company also announced the appointment of JP Morgan as a consultant, while the Tesla CEO said he would cooperate with Morgan Stanley in this deal.

Can Elon Musk succeed in this deal?

Experts believe this will be an extremely difficult question to answer, despite the huge influence Elon Musk has with 81 million followers on Twitter, and the $43 billion offer that makes up less than 1 million. His fifth largest fortune in the world.

But in reality, most of Elon Musk’s fortune is in the form of shares in companies he controls like Tesla and SpaceX. To raise capital for this plan, he will not have too many options, but to borrow or sell Tesla stock. He himself admitted that he was “not certain of success”, and had prepared a “plan B”, although he did not disclose the details of this plan.

Exciting Twitter

Elon Musk said he was “not sure” that he could take over Twitter (Source: CNN)

With their moves, Twitter’s leadership also shows that they will not be easily controlled by Musk’s offer. Mr. David Trainer, director of investment consulting firm New Constructs, said that CEO Agrawal will have support from current shareholders, because “Apart from his star status, Musk does not bring any real value. for Twitter shareholders, and it’s also hard to push the company forward in the long term.”

Experts also note that there are many times that Elon Musk makes a statement and then retracts it, or it fails. Most recently, shortly after announcing the purchase of Twitter shares, Elon Musk accepted to join the Board of Directors and pledged not to seek to acquire the company. However, this billionaire changed his mind at the last minute.

While Twitter is said to be able to “resist” to Elon Musk’s ambitions, this does not mean that the company will be “immune” to future acquisitions. This was stated by co-founder and former CEO Jack Dorsey in a tweet commenting on the event: “As a public company, Twitter will always be ‘for sale’ – That’s the core issue here.”

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