Twitter In The Age Of Tesla CEO Elon Musk

Following Tesla CEO Elon Musk’s $44 billion acquisition of Twitter (TWTR), the social media network has experienced a string of chaotic occurrences, including a workforce reduction by half and general confusion regarding content moderation and different policies. Here is a detailed analysis of one of the most divisive business stories of the year.

Musk joined Twitter for the first time in June 2009 and has since racked up over 115 million followers.

His tweets have made news headlines over the years and even affected changes in stock prices and the price of bitcoin.

The idea of buying the service didn’t come up until a user requested Musk to buy Twitter in 2017 and he responded, “How much is it?”

Although Musk has frequently used Twitter in a variety of situations throughout the last 13 years, his tweets started to veer away from memes and Tesla in 2020 and toward criticisms of Twitter’s algorithm, bot accounts, and how it has impacted “public conversation.”

In January 2022, Musk began purchasing Twitter stock. He asked his followers this query two months later: “A healthy democracy depends on the right to free speech. Do you think Twitter sticks to this rule to the letter?”

Musk publicly expressed interest in creating a different but comparable platform and asked openly how the free speech restrictions at the “public town square” that is Twitter were harming democracy. Additionally, he said that if he were to buy the business, he would lift the ex-president Donald Trump’s Twitter ban because, in Musk’s opinion, it was a “morally awful move.” (Trump was blocked from Twitter after the Capitol uprising on January 6, 2021.)

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According to the Associated Press, when Musk kept purchasing Twitter shares, he surpassed Parag Agarwal as the company’s top stakeholder, with 73.5 million shares. Agarwal subsequently sent Musk an invitation to join the Twitter board of directors. Musk declined the proposal. Musk was negotiating a deal to acquire Twitter on his own at the same time.

Twitter announced in April that Musk had offered to purchase the business for $43 billion, claiming that it “has to be changed as a private firm,” but the business had presented a “poison pill.”

By issuing new stock, a poison pill typically enables the board of a company to make the takeover as expensive as possible. In the 1980s, company boards would frequently employ this defense tactic if they suspected a hostile takeover was in progress. According to the Associated Press, it would only be applicable for Twitter once a shareholder collected a stake of 15% or more. At the time, Musk owned 9.1% of the business.

The next stage was to secure money for the purchase, which is now valued at $44 billion, and Musk had powerful people on his side. Musk was able to raise $7 billion from tech investors like Sequoia Capital Fund, Oracle co-founder Larry Ellison, and the Crown Prince of Saudi Arabia, who gave him $35 million in Twitter shares, after selling $8.5 billion worth of Tesla shares. The remaining funds were provided by Musk’s stock and several bank loans. Shares of Twitter increased as more well-known individuals contributed.

At the time, there were differing views regarding Musk in the American public. According to a Morning Consult survey, 17% of U.S. adults had a very good opinion of him on average, and the majority had heard of him but had no strong feelings about him.

Musk, though, abandoned his aspirations to acquire Twitter in May. He questioned the veracity of Twitter’s report regarding the amount of bots and bogus accounts. Many questioned if he would carry out his Twitter ambitions once he placed the acquisition “on hold,” with one Forbes writer guessing that he was likely experiencing “buyer’s remorse.”

After a few weeks, Musk threatened to cancel the agreement if Twitter didn’t give him information on bots and phony accounts. By July 8, he made it clear that he was rejecting the buyout proposal, which prompted Twitter to sue him for breach of contract. The corporation was then sued again by Musk.

According to NPR, Twitter’s former Head of Security Peiter Zatko exposed the company’s carelessness in handling phony accounts and bots on the platform in August. That helped Musk in his legal battle with Twitter.

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But before the case could be heard in court, Musk decided to follow through with the $44 billion acquisition that had been originally agreed upon.