May 15, 2022
Decoding Elon Muskās placing of his Twitter bid āon holdā
By
Rajan Laad
When Elon Musk announced his $44 billion takeover bid to Twitter, it caused celebrations and meltdowns in equal measure.
Conservatives and libertarians, who have been the recipients of step-motherly treatment on Twitter owing to its overwhelming liberal bias, hoped Musk would liberate the platform into a haven for free speech.
Liberals feared losing control over a primary tool of communication and manipulation. Hence,
Twitter employees staged walkouts. MSNBC said that Muskās takeover would have
'massive, life and globe-altering consequences'. The
New York Times and the
Washington Post scurrilously attacked Musk.
There were a few
commentators of perspicacity who urged cautious hope over blind optimism.
Some financial experts said that the price tag of $44bn was much more than Twitter's actual worth.
The fact remains that despite its impact,
Twitter has struggled to generate revenue like Facebook or TikTok. This is because Twitter hasnāt been able to seamlessly embed adverts and other money-generating tools into its app.
Twitter was founded in March 2006 but became profitable only towards the end of 2017. The road has continued to be bumpy despite the profit. Twitter lost $221 million in 2021.
Twitter also revealed last month that it had suffered a first-quarter loss and that it has āaccidentally overstatedā its number of users since 2019.
This is why investors kept their distance from Twitterās stock. Prior to Musk's hostile takeover bid, Twitter's stock was worth 12 % less than what it was priced when the firm went public around eight years back.
Last month, the news of Musk becoming Twitterās largest shareholder, owning a 9.2% or $3 billion,
triggered a rise of more than 27% in the company's stock price.
Just when things had settled down, there was another twist to the tale.
A few days back, Musk caused another frenzy across social media platforms and in financial markets when he announced that his takeover bid was ātemporarily on holdā. He cited numerous fake accounts on social media sites as the reason.
Twitter deal temporarily on hold pending details supporting calculation that spam/fake accounts do indeed represent less than 5% of users
https://t.co/Y2t0QMuuyn
ā Elon Musk (@elonmusk)
May 13, 2022
There are a few possible explanations behind Muskās sudden move.
Perhaps Musk realizes that his initial bid was too high and is attempting to compel Twitter to return to the negotiating table in order to lower the price. Legal experts say Twitterās board would risk being
sued if it agreed to a lower price without serious justification.
Another possibility is that Musk is looking for a way out.
It must be remembered that the stock of Tesla plummeted by 7% when Musk announced his Twitter takeover. Perhaps Tesla's Board of Directors was not pleased that Musk plans to finance his Twitter takeover by borrowing against the value of his holdings in Tesla. Perhaps the Tesla Board thinks that Musk would become a divisive figure that hurts the Tesla brand if he took over Twitter. Maybe they pressured Musk to withdraw?
Musk experienced what it feels like to be in the eye of the storm since his take-over announcement in April. For a month, some of the worst epithets known were conferred upon Musk. Musk understands that as an investor and a businessman getting along with people of all ideological and political persuasions is essential.
Musk has seen how President Trump has been baselessly subjected to legal scrutiny and government investigations for merely challenging the status quo.
The Securities and Exchange Commission is already investigating Musk over alleged tweets that could
influence Teslaās share price without permission from a company lawyer. The SEC
is also investigating Muskās delayed disclosure of his large stake in Twitter.
Or better yet he could give Twitter for free to Donald Trump, lol! Just for the sake to see lots of leftists heads exploding!
