A cryptic tweet by Elon Musk and late-night purge of top executives closed Twitter’s takeover saga as chaotically as it began, with no formal announcement just a four-word post by the self-declared Chief Twit — “the bird is freed.”
The billionaire founder of Tesla and SpaceX who said he is buying the platform “to help humanity” is set to hold a town hall later today with staff. Musk has threatened to slash the workforce and will, in fact, require major cuts to meet what will be Twitter’s reported interest burden of $1 billion annually to lenders who helped him close the $44 billion deal — a pricetag that will go down as one of the most overpaid tech acquisitions in the history of M&A deals on the Street, said analyst Dan Ives.
The New York Stock Exchange halted trade in Twitter shares before the open today and plans to delist it completely by Nov. 8.
The focus now turns squarely to how the self-described “free speech absolutist” plans to run the giant social media platform, which is highly influential in the U.S. and abroad, especially with key elections looming. Twitter last reported 238 million daily active users. Musk’s comments on free speech have horrified the platform’s liberal audience and public interest groups. He has said he does not believe in permanent bans on users. A question is whether he will re-platform former President Donald Trump, who was ejected from Twitter in Jan. of 2021 for fomenting violence around the Jan. 6 uprising at the U.S. Capitol. Musk has said publicly that he thought that decision was a mistake.
One of the fired executives, Vijaya Gadde, was Twitter’s head of legal and policy, overseeing content moderation. Also shown the door were CEO Parag Agrawal and CFO Ned Segal. Musk apparently plans to take over as chief executive for the time being.
Social media has become even more of a Wild West lately with Kanye West, know as Ye, and currently in the midst of a deep backlash for antisemitic rants, buying conservative network Parler earlier this month. Trump is holding court on his own platform, Truth Social. This latest round of earnings has seen Snapchat parent Snap’s stock decimated by a slowdown in digital ad sales and lower engagement. Wall Street is spewing bile at Mark Zuckerberg and Meta, the parent of Facebook and Instagram, for pivoting to an as yet undefined Metaverse business that lost $3.7 billion last quarter alone.
Business plans for Twitter will continue to include advertising. It’s the bulk of the company’s revenue but Musk said early on a goal would be to lessen dependency on Madison Avenue. Advertisers are sensitive to where their products appear and can have a moderating effect on content. Musk, in an open letter yesterday, welcomed advertisers as long as their content is “relevant” to users, and reassured them that, “Twitter can obviously not become a free-for-all hellscape where anything can be said with no consequences!”
“Not ‘a free for all hellscape’ is a pretty low bar,” noted Jonathan Greenblatt, CEO of the Anti-Defamation League, on CNBC today.
This ending is a very good one for most Twitter shareholders, who were bought out at a hefty $54.20 a share, a price agreed on back in April when the deal was signed. The company’s financial performance had been historically weak and it had not been highly successful in monetizing its user base.
The road to today’s deal was tortured. Shortly after signing the agreement, Musk balked as the stock market plunged, along with shares of Twitter. He launched a campaign against the company he had pledged to buy, undermining Twitter’s management, business and morale with insults and tweets that included a famous poop emoji. At one point, he declared the deal was “on hold,” then he unilaterally terminated it in July.
Twitter sued in Delaware Chancery Court, saying buyer’s remorse was not a legal basis to walk away.
Musk insisted his concern was Twitter’s underreporting the number of fake, or bot, accounts on its platform.
As the two sides headed to trial first set for Oct. 17, Musk’s case seemed weak, in part because he had expressly waived the right to due diligence in the merger agreement – a decision that’s been hard to understand. As discovery continued, he tried to renegotiate the price down, but no go. About to be deposed, he flip-flopped again and renewed his original offer.
A judge stayed the trial and gave him an Oct. 28 deadline to close.
On a Tesla earnings call last week, Musk said he and fellow investors are “clearly overpaying” but that “the long-term potential for Twitter in my view is an order of magnitude greater than its current value.”
