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I, For One, Welcome Our New Twitter Overlord
Surprising news to start the week: Elon Musk, the richest man in the world, bought 9.2% of Twitter last month. He will now join the social media giant’s board of directors and promises to “make significant improvements to Twitter in [the] coming months”.
The CEO of Tesla and SpaceX is something of a real-life Tony Stark — mixing engineering brilliance with a personality and gravitas to match.
Musk has been a thorn in Twitter’s side for some time, marshaling his massive following (80+ million followers) to attack the platform on issues ranging from its opaque algorithm to inconsistent (some say partisan) regulation of users.
And, now, he’s Twitter’s largest shareholder.
Nothing about this will be boring.
Exhibit 1: Late last month — before anyone even knew that he had purchased a sizable stake in the company — Musk polled his followers (and others) on whether or not Twitter upholds the principle of free speech.
Two million votes later… the verdict was not kind.
Musk claims that he will be a passive investor in Twitter.
Left unsaid is for how long.
[Update: Well, that was quick. Last night, Musk and Twitter filed that he will now be considered an active investor.]
The next time the platform wades into a contentious issue — or gets an itchy ban finger — the newest board member might have something to say about it.
I don’t think anyone honestly expects him to remain quiet after shelling out this kind of money. Musk is no shrinking violet.
Exhibit 2: On Monday, he was back with another poll — this one asking if Twitter should have an edit button, so that tweets can be modified after being sent.
This seemingly minor feature request is actually something of a sticky wicket for the platform. A huge plus for those of us prone to fat-finger-induced typos, but potentially hazardous for retweets and likes. Just imagine a politician who retweets some benign pablum, only to have the message edited into something inflammatory hours later.
I don’t think the world is ready.
If the early returns are anything to go by, it seems as if Musk plans to crowdsource ideas for improvements and tweaks through Twitter polls and the like.
A true man of the people.
And one thing is for sure: Elon Musk is not stupid. He wouldn’t spend billions on a vanity project — no matter how much Twitter gets under his skin. His investment makes plenty of sense from a financial perspective, too.
No one could mistake TWTR for a traditional value play — particularly after losing money in 2021 — but it did trade below its 2013 IPO price before news broke of Musk’s investment. Since then, though, it has rocketed 33% higher.
“It’s nice when a company reports profits,” said Howard Fischer of Moses & Singer, “but it seems much better if a company reports its association with Elon Musk.”
Twitter’s valuation still lags far behind other leading social media platforms, largely because of struggles to monetize its user base. That’s one area that Meta Platforms and Alphabet (YouTube) excel in. If Musk can drive improvement there, Twitter’s financial picture gets much rosier.
The company feels that it can boost revenue from $5 billion in 2021 all the way up to $7.5 billion by 2023. Aggressive, but not impossible.
Plus, Twitter is largely irreplaceable. It’s the platform of choice for breaking news and serves a vital purpose as celebrities, journalists, politicians, athletes, CEOs, etc. all use it as an unfiltered medium to communicate with the world. As Musk put it last month, Twitter is the de facto public town square.
Put simply, you couldn’t just start up another social media company and displace Twitter. At least not without spending many, many billions of dollars.
In that sense, Elon Musk bought low on what is practically a pillar of the modern internet.
And that’s never a bad idea.
Disclosure: This is not financial advice. I am not a financial advisor. Do your own research before making any investment decisions.