But investors doubt the sincerity of the bid and its benefits
AS TWEETS GO “I made an offer” seems relatively unexciting. But when the offer in question is from Elon Musk to buy Twitter, the social-media platform itself, that is a different matter. On April 13th the boss of Tesla and SpaceX made a cash offer of $54.20 a share, valuing the firm at $43.4bn. The bid is a third higher than Twitter’s price when Mr Musk first revealed that he had built up a stake in the company. His plaintive tweet raises another barrage of questions about the future of Twitter and the world’s richest man.
Mr Musk set out his reasoning in a filing with the Securities and Exchange Commission, America’s main financial regulator. He believes that Twitter has “potential to be the platform for free speech” which he sees as a “societal imperative”. Achieving this and letting the company thrive requires it to be taken private, he reckons. Mr Musk signed off the filing by saying: “Twitter has extraordinary potential. I will unlock it.” He later said that he was not in it for profit but the public interest in maintaining a “de facto town square”.
The bid is the latest twist in weeks of drama. On April 4th, Mr Musk announced that he had built up a 9% stake in the company to become its largest shareholder. This excited investors. Twitter’s share price jumped by 27% the same day. He was then invited to join the board. He rejected the offer but has tweeted a list of improvements the platform could make.
Why then have investors reacted with little enthusiasm to the bid? So far Twitter’s shares have barely shifted. Perhaps it is hard to take the offer and Mr Musk’s stated motivation seriously. After all, he has a history of clownish antics. The offer price of $54.20, for example, may be a thinly veiled reference to 420, a number that potheads hold dear and one that Mr Musk has joked about before.
Yet Mr Musk has hired Morgan Stanley, a bank, as a financial adviser to execute the offer. He has the means to pay for it. His personal wealth exceeds $200bn, though he would have to sell shares in Tesla, a publicly traded carmaker or SpaceX, his privately held rocket company, or bring together a consortium of other buyers. Mr Musk’s belief that Twitter can thrive as a free-speech haven should not be sniffed at either. Strongly held convictions have been a driving force when building his other companies. For Tesla it was his faith that decarbonisation is vital; for SpaceX his obsession with space flight.
A takeover would be a welcome shake up for Twitter. Take the company’s content-moderation rules. Like all social-media platforms, they are impossible to enforce without hiring human moderators in such huge numbers as to bankrupt the company. As a result enforcement is arbitrary, inviting criticism from left- and right-wing commentators alike. User numbers is another weakness. In America, Twitter’s biggest market by revenue, the firm’s daily active users number 40m, around half that of Snapchat or TikTok, two social-media rivals. Twitter has been trying to lure creators (and their fans) from other platforms with new features, such as subscription tweets and virtual events. But these ventures have yet to pay off.
One risk, which may explain investors’ tepid response, is that Mr Musk takes on too much. He is a hands-on manager and even for a workaholic, running Twitter on top of Tesla, SpaceX and smaller ventures such as Boring Company, a tunnelling firm, and Neuralink, a brain-computer interface firm, could stretch him beyond his limits.
Twitter’s board must now review the offer. Rumours are rife that they intend to fight off Mr Musk perhaps using a “poison pill”. The offer may also flush out other bidders, such as asset managers, private-equity firms or tech giants. Vanguard Group, a huge investment fund, has overtaken Mr Musk by increasing its stake in Twitter to 10.3%. In Mr Musk’s filing he said: “I am not playing the back-and-forth game…I have moved straight to the end”. But the end may not yet be in sight.
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