US National Public Radio thinks Twitter may be Elon Musk ‘s white whale : an obsession doomed to ruin him like Moby Dick ruined Captain Ahab. The Economist wonders if it won’t become “a hell of a deal”. Certainly, the $ 44 billion acquisition completed a few hours ago is an unprecedented operation in the career of the richest man in the world. Because as Andy Wu, a Harvard business strategy lecturer pointed out, “Musk has no experience in managing organizational change.” He is used to creating companies from scratch and molding them. In Twitter, however, he will find “a culture that will have to change to reach his goals”.
The first objective, on an economic level, is to “unlock the potential” of Twitter and make it a “healthy” company from a financial point of view. It may not be the most important, though. According to Molly Ball, a Time reporter who wrote Musk’s profile when the magazine chose him as Person of the Year, the operation is more ideological than economic. “Unlike Tesla and SpaceX, which produce objects, Twitter is a pure tech company,” Ball told NPR . “His business is the ether. It is much more political ”.
Musk has already made his first move as an owner: as soon as the deal was closed, he fired four high-level executives . Among them is also the managing director, Parag Agrawal . A decision predicted, among others, by Jack Dorsey, founder of Twitter. Dorsey, as Fortune recalls, in the spring tried to mediate between Musk and Agrawal after the first frictions. A few days later he sent a message to the founder of Tesla: “At least it became clear that you can’t work together.” Musk himself will hold the Agrawal office, writes Bloomberg , for now, waiting to find a full-time CEO.
Elon Musk, “the absolutist of free speech”
Musk, with a tweet in March, defined himself “an absolutist of free speech”. The following month he declared himself “against censorship that goes far beyond the law”. At the time of the official announcement of the purchase of Twitter, he stated that “freedom of speech is the basis of the functioning of a democracy” and that the platform “is the digital place where vital issues for the future of humanity are discussed. “. In an open letter to advertisers, he specified that social media “cannot become a hellish landscape where you can say anything without consequences”, but analysts and commentators still expect a revision of the rules that punish hate speech and disinformation.
The most important consequence, especially in view of the US presidential elections of 2024, will be the probable return to the platform of Donald Trump.. In May Musk called the expulsion of the former president “morally wrong” and “stupid to the extreme”, who had written some tweets in which he legitimized the insurrection of January 6, 2021 at the Capitol. Along with Trump, other politicians and public figures may also return who have supported the theory of manipulation of the 2020 elections without proof, or who have spread false news about Covid and vaccines. And then Kanye West, just hunted for post anti-Semites, and Alex Jones, the far-right conspiratorialist who claimed that the Sandy Hook school massacre was a staged hoax to pass restrictive gun purchase laws. Claims that he was just sentenced to pay nearly a billion dollars in compensation to the families of the victims.
Subscriptions and payment systems
The return of characters like Jones could impact Twitter’s revenue. “Advertisers want to know that their ads won’t appear alongside extremists’ tweets,” Angelo Carusone , president of the non-profit organization Media Matters for America, told NPR. “They want to be sure, in short, that they’re not funding or associating with the kind of thing that could turn potential customers away.”
Also for this reason Musk intends to diversify the sources of income . In a presentation to investors in June, obtained by the New York Times, he proposed, among other things, the introduction of subscriptions and a payment system. The weight of advertising is expected to drop from 90% to 45% of revenue, revenues rise from 5 billion in 2021 to 26.4 in 2028, users from 217 to 931 million in the same period of time. This is also the purpose of the company’s delisting: Musk wants to act without having to worry about the reaction of the stock market.
The staff reduction
On the other hand, the 75% staff reduction announced last week by the Washington Post seems averted. Elon Musk, according to Bloomberg, denied the news in a meeting with employees. The same newspaper, however, explains that some cuts will happen the same. Also because in June the founder of Tesla stressed the need to cut costs, now higher than revenues. Over the past two years, Twitter has closed with a loss: -1.4 billion in 2020, -221 million in 2021.
According to the New York Times , employee concerns are also about compensation. Musk agreed months ago to replace employee-guaranteed stock options with regular cash bonuses. Since Musk has already changed his mind on other aspects of the agreement several times, the newspaper writes, some employees fear that he will not honor the commitment.
From Twitter to the app for everything
Elon Musk’s most ambitious project is the one announced in a tweet on 5 October: building X , “an app for everything”. The model, as Forbes.com explains, would be that of WeChat, Tencent’s Chinese super app that combines social media, messaging, payments and reservations. “In China, you basically live on WeChat,” Musk said in June. “If we could do something similar with Twitter, it would be a huge success.” The expected timing for the launch, indicated in another tweet on October 5, would be 3-5 years.
The Twitter affair will also have repercussions on other Musk companies. Dan Ives, a Wedbush analyst quoted by Forbes.com, predicted last week that Musk will have to sell between $ 5 and $ 10 billion in Tesla stock to finance the purchase, having already sold for $ 30 billion since the beginning of the year. The stock is down 40% since April 4, when Musk revealed he owns 9% of Twitter. Ives also stated that “the price of 44 billion will make the acquisition of Twitter one of the most overpaid in history”. The real market value of the company, in his opinion, is around 25 billion.