Elon Musk Attempts Hostile Takeover of Twitter: Here’s How Users Reacted to His $43-Billion Offer
Elon Musk Attempts Hostile Takeover of Twitter: Here’s How Users Reacted to His $43-Billion Offer
Elon Musk’s offer to buy Twitter stunned the globe. The Tesla CEO has made an all-cash offer to buy the social networking site for $43 billion (approximately Rs. 3,28,080 crore).
With a 9.2 per cent investment in Twitter, Musk is one of the company’s biggest shareholders. People have filled Twitter with sentiments ranging from severe concern to humorous memes about the social media platform’s demise. Because Twitter’s shares ended at $45.85 (approximately Rs. 3,510) on April 13, Musk’s offer of $54.20 (about Rs. 4,150) per share represents an 18% premium. Reactions are now coming in from all directions. Here’s what Twitter users had to say about Musk’s bid to buy Twitter.
Mark Cuban, the Dallas Mavericks’ owner and billionaire entrepreneur, remarked, “Do you want to watch the entire world lose their minds? Collaborate with Elon Musk and Peter Thiel to increase the bid for Twitter.”
A New York Times best-selling author, Ben Shapiro, remarked, “The automatic employment sorting system would be the greatest part of Elon Musk’s takeover. Takes care of almost all HR issues right away.”
“Twitter is too significant to be owned and controlled by a single individual,” venture capitalist Fred Wilson remarked.
Angela Belcamino, an actress and writer, wondered if people would abandon the network if the takeover occurred.
According to one user, Musk’s “game” with Twitter could be “hazardous” because the medium has a lot of power to sway public opinion.
On social media, memes regarding Musk’s effort to buy Twitter for all cash are circulating.
Meanwhile, during an all-hands meeting on Thursday, Twitter CEO Parag Agrawal allegedly sought to reassure employees that the company was not being “kept hostage” by rumours of Musk’s offer to buy the company.
Twitter CEO Reassures Employees, Company is Not Held Hostage by Elon Musk’s Offer
During an all-hands meeting on Thursday, Twitter CEO Parag Agrawal sought to reassure staff that the company was not being “kept hostage” by reports of Elon Musk’s offer to buy the company, according to a source familiar with the situation.
The source, who did not want to be identified because they were not authorised to talk publicly on the topic, claimed that when Agrawal answered queries posed on the company’s Slack messaging programme, he encouraged employees to stay focused and told them that “we as employees decide what happens.”
The meeting took place after it was revealed that Tesla CEO Elon Musk had proposed to buy Facebook for $43 billion (roughly Rs. 3,29,280 crore).
Agrawal told employees that the board was still considering Musk’s offer but that he was limited in what he could say to them.
One employee inquired during the question and answer session about how the business decided to offer Musk a board position.
According to a segment of the discussion heard by Reuters, “Are we just going to start admitting any billionaires to the board?”
The board, according to Agrawal, was acting in the best interests of shareholders.
“I have a strong belief that those who are critical of our service should have their voices heard for us to learn and improve,” he said.
Another employee posed a question to Agrawal, asking him to comment on Musk’s understanding of free speech and whether it agreed with Twitter’s policy.
Agrawal did not directly respond to the issue, instead stating that a large part of the company’s work is focused on enhancing “the health of discourse” on Twitter.
“Twitter speaks for a lot more than one individual, any human,” Agrawal stated earlier in the Q&A.
A representative for Twitter declined to comment on the meeting.
Elon Musk’s Offer to Buy Twitter Sparks Concerns Among Tesla Investors, Analysts
Tesla investors and analysts are afraid that Elon Musk’s offer to buy Twitter would detract from the electric automaker’s performance, as the CEO is preoccupied with his takeover bid and expected stock sales to pay it.
The billionaire entrepreneur, who also owns the rocket company SpaceX, made a $43 billion takeover offer to Twitter on Thursday.
Tesla watchers are concerned about Musk working to finalise that acquisition, maybe by selling even more of his Tesla stock and supervising yet another company.
“Elon is preoccupied. He’s involved in various activities, “Gene Munster, managing partner of Loup Ventures, a venture capital firm that holds shares in Tesla. “Tesla’s stock will face a one-to-three-month headwind.”
Since he announced his more than 9% ownership in Twitter last Monday, shares of Tesla, the world’s most valuable automaker, have dropped more than 9%. Tesla’s stock fell 3.7 per cent on Thursday.
While Musk has spoken about potential improvements he would want to see on Twitter, analysts say Tesla is facing its own issues, including the need to ramp up production at new assembly factories in Berlin and Texas. Meanwhile, the COVID-19 crackdown in China has shut down Tesla’s Shanghai facility, which is the company’s largest.
“Musk is Tesla,” Roth Capital Partners analyst Craig Irwin said. “Investors don’t want to see Tesla lose its leadership advantage.”
Before this excursion, investors had Musk’s own comments on which to base their suspicions. He said last year that he worked seven days a week, “crazy hours,” dividing his time between Tesla and SpaceX. He’s also the CEO of Neuralink, a brain-chip firm, and the Boring Company, a tunnelling company.
Another concern, according to analysts, is how Musk will fund a prospective acquisition of Twitter, which would require stock sales and large loans.
According to Wells Fargo analyst Colin Langan, Musk, who owns over 9% of Twitter, would require $39 billion (approximately Rs. 2,98,740 crore) to close the deal. The selling of further Tesla shares might put even more pressure on the market.
According to Tesla regulation, executives may use their business stock as collateral for loans. However, the maximum loan cannot exceed 25% of the total value of the pledged shares.
By pledging all of his $170 billion worth of shares, he could borrow $42.5 billion (approximately Rs. 3,25,548 crore) (roughly Rs. 13,02,190 crore). According to a Tesla document from last year, he had already committed almost half of his Tesla shares as security to secure certain personal liabilities.
Musk announced on Thursday that he had the funds to buy Twitter, but he didn’t elaborate.
The world’s wealthiest person’s fortune is mainly made up of Tesla and Space X stock. Late last year, he sold almost $16 billion (approximately Rs. 1,22,560 crore) in Tesla stock, with $11 billion (about Rs. 84,259 crore) going to taxes.
Howard Fischer, a partner at Moses & Singer and a former senior trial counsel at the US Securities and Exchange Commission, said, “He’s potentially setting himself up for a major problem down the road.”
Twitter is a blogging and social networking service located in the United States that allows users to post and receive “tweets,” which are short messages. Registered users can compose, like, and retweet tweets, but unregistered users can only view them.
Twitter is accessed by the browser or mobile frontend applications and programmatically through its APIs. Before April 2020, services could only be accessed through SMS.
Twitter, Inc., established in San Francisco, California, with more than 25 offices around the world, provides the service. Tweets were initially limited to 140 characters, but in November 2017, the limit was raised to 280 characters for non-CJK languages. Most accounts still limit audio and video tweets to 140 seconds.
Jack Dorsey, Noah Glass, Biz Stone, and Evan Williams founded Twitter in March 2006, and it launched in July of that year. In 2012, the service processed 1.6 billion daily search searches and had over 100 million users posting 340 million tweets each day. It was one of the top ten most-visited websites in 2013 and has been dubbed “the Internet’s SMS.” Twitter had over 330 million monthly active users at the start of 2019. In practice, only a tiny percentage of people write the majority of tweets.
Dorsey led the startup through two rounds of financial funding from the venture investors that backed the company as CEO. Williams was named CEO on October 16, 2008, while Dorsey was named chairman of the board. Williams announced his departure from the company as CEO on October 4, 2010. Dick Costolo, who previously served as Twitter’s COO, was named CEO. On October 4, 2010, Williams announced that he would stay with the company and “be entirely focused on product strategy.”
According to The New York Times, when Williams was away, “Mr Dorsey and Mr Costolo formed a tight friendship,” according to The New York Times. Williams was “no longer active in the day-to-day goings-on at the company,” according to PC Magazine. He was working on a new startup at the time, and he joined Twitter’s board of directors, promising to “assist in any way [he] could.” Stone was still with Twitter in 2011 but now worked for AOL as an “advisor on volunteer activities and philanthropy.” Stone announced the launch of Jelly, a “social Q&A network for smartphones”, in January 2014.
In March 2011, Dorsey returned to Twitter as executive chairman, focused on product development. He shared his time at the time with Square (where he is CEO), whose San Francisco offices are within walking distance of Twitter’s.
Fred Wilson and Bijan Sabet, both board members and investors, resigned from Twitter’s board of directors in September 2011. Matt Derella, a former Google employee, was hired as Twitter’s new director of business agency development in October 2012.
Anthony Noto, a former Goldman Sachs executive, was hired as Twitter’s CFO in July 2014, with a “yearly remuneration of $250,000 and one-time restricted stock options of 1.5 million shares… valued at $61.5 million.”
Dick Costolo, the CEO of Twitter, announced his resignation on June 10, 2015, with effect from July 1, 2015. Noto has been mentioned as a potential successor to Costolo, who is stepping down. On October 14, 2015, Omid Kordestani, a former Google Chief Business Officer, was named executive chairman, following Jack Dorsey, who remains CEO.
Formerly of American Express’s worldwide advertising, marketing, and digital partnerships, Leslie Berland was named chief marketing officer on January 26, 2016.
COO Adam Bain announced his departure in November 2016, and CFO Anthony Noto took over as COO. CTO Adam Messinger announced his departure a month later, on December 20, 2016.
Elliott Management Corporation purchased a stake in Twitter in February 2020, with activist shareholder and Republican Party backer Paul Singer expected to seek Dorsey’s resignation as CEO. Twitter decided to hire a new independent director and two new board members and buy back $2 billion in stock.
Jack Dorsey will stand down as CEO on November 29, 2021. Parag Agrawal, the CTO, took his post.
About Elon Musk
Elon Reeve Musk, born June 28, 1971, is an entrepreneur, investor, and business leader. Musk is the founder, CEO, Chief Engineer of SpaceX, and the co-founder of Neuralink and OpenAI. Elon Musk is also the founder of The Boring Company and an early-stage investor, CEO, and Product Architect at Tesla, Inc. According to the Bloomberg Billionaires Index and the Forbes real-time billionaires list, Musk is the world’s wealthiest person, with an estimated net worth of US$273 billion as of April 2022.
He was born in Pretoria, South Africa, to a white South African mother and a Canadian father and studied at the University of Pretoria before fleeing to Canada at the age of 17 to avoid conscription.
He spent two years at Queen’s University before transferring to the University of Pennsylvania and earning a bachelor’s degree in economics and physics. Musk shifted to California in 1995 to attend Stanford University; however, he instead chose to pursue a career in business, co-founding Zip2 with his brother Kimbal. Compaq purchased the company for $307 million in 1999. Musk co-founded X.com, an online bank, in the same year, which merged with Confinity to establish PayPal in 2000. eBay bought the company for $1.5 billion in 2002.
Musk is the CEO and Chief Engineer of SpaceX, which he founded in 2002 as an aerospace manufacturer and space transportation services company. In 2004, he joined Tesla Motors, Inc. (now Tesla, Inc.) as chairman and product architect, and in 2008, he became the company’s CEO. He was a co-founder of SolarCity, a solar energy services company that Tesla later bought and rebranded Tesla Energy.
In 2015, he co-founded OpenAI, a nonprofit research organisation dedicated to AI that is friendly to humans. In 2016, he co-founded Neuralink, a neurotechnology company that develops brain-computer interfaces, as well as The Boring Company, a tunnelling company. Musk has proposed the Hyperloop, a high-speed vactrain transit system.
Musk has been chastised for his unconventional and unscientific viewpoints and his widely publicised and divisive utterances. The Securities and Exchange Commission (SEC) sued him in 2018 after he falsely tweeted that he had secured funds for a private acquisition of Tesla. He came to an agreement with the SEC, stepping down as chairman for the time being and consenting to Twitter usage limitations.
In 2019, he won a slander claim brought against him by a British cave rescuer who helped in the Tham Luang cave rescue. Musk has also been condemned for spreading misleading information about the COVID-19 outbreak, as well as his other views on artificial intelligence, bitcoin, and public transportation.
Elon Musk buys a 9.2% stake in Twitter, making him the largest shareholder
According to a filing dated April 4 2022 (Monday), Elon Musk recently purchased 9.2 per cent of Twitter stock, making him the company’s largest stakeholder.
After the deal was announced, Twitter’s stock jumped 22% in early trading. Musk did not specify how much he paid for the shares, but it was worth $2.9 billion at Friday’s close and $3.5 billion after the early Monday surge.
Musk’s filing did not reveal the purpose of the purchase or any future plans for the company. He has, however, been an outspoken opponent of Twitter’s rules in the past.
Musk revealed last month that he was considering developing a new social media platform.
“Given that Twitter serves as the de facto public town square, failure to respect to free speech principles greatly undermines democracy,” Musk wrote last month.
The Securities and Exchange Commission requires investors who buy more than 5% of a company’s stock to record the transaction. Although Wall Street considers a position of less than 10% in a company “passive,” it could reflect Musk’s willingness to play a more active role in Twitter’s administration. This is one of the reasons why other investors rushed to buy shares on Monday (April 4), causing the price to surge.
“I believe he intends to become more involved at Twitter and demand change,” said Dan Ives, a tech analyst at Wedbush Securities. “This is a warning shot to Twitter’s board of directors and management team to start talking.”
Even if Musk does not attempt to change Twitter’s economic model, Ives believes that Musk’s large investment will motivate other activist investors to participate in the company.
“In one way or another, he’ll change the course of Twitter,” Ives said.
According to Ives, Musk or anybody else will be unable to build a new, competing platform from the ground up. Due to this, it’s more logical for him to try to change Twitter’s policies.
Musk is one of the most popular Twitter users.
Musk has more Twitter followers than any other CEO, at 80 million. And he’s a regular tweeter, using it as the main means of communicating information about Tesla (TSLA) and SpaceX, the two firms he controls that don’t have a formal public relations department.
However, his tweets have landed him into problems on occasion and announced in 2018 that he would take Tesla private for $420 per share and had “financing secured” to do so. While he did discuss supporting such a bid, it was later revealed that the funding was far from guaranteed.
Musk settled the dispute by stepping down as Tesla’s chairman, though he remains the company’s CEO. He and Tesla were fined $20 million, with Musk repaying Tesla by purchasing an extra $20 million in Tesla stock.
He also committed to having future tweets containing material information regarding Tesla reviewed by other Tesla executives before being sent out. The SEC has questioned whether he is complying with that condition of the agreement, and Musk and the agency are currently battling in court over the issue.
Twitter’s recent turmoil
Last November, Twitter founder Jack Dorsey abruptly stepped down as CEO without the kind of notice that usually comes with such a shift in leadership. Parag Agrawal, the chief technology officer, took over as his successor.
Musk had previously shown support for Dorsey when certain shareholders were chastising him. When someone else pointed out that Google, Microsoft, Adobe, Palo Alto Networks, and Twitter are all headed by CEOs who grew up in India, Musk responded with a tweet of his own: “USA benefits enormously from Indian brilliance!”
But, some days later, he posted a parody equating Agrawal to former Soviet despot Joseph Stalin and portraying Dorsey as a former Stalin confident in the dictator’s assassination.
In a letter to clients, Morningstar analyst Ali Mogharabi stated, “Musk has already signalled that he did not agree with Agrawal’s selection and that he desires some adjustments.” “This raises questions about how Agrawal and the company will react to the firm’s new largest shareholder.”
Unlike Musk, who owns more than 20% of Tesla, Dorsey’s position in Twitter is far less, at only 2.3 per cent of the company’s stock.
According to Ives, Musk does not need to become the CEO of Twitter to urge the firm to change its ways. And it’s unclear what kinds of reforms he’d like to see.
He recently conducted a Twitter survey asking his followers if they feel Twitter strictly adheres to the idea of free speech, which received 70% negative responses. Another poll asked if its algorithms should be open source, which received 83 per cent positive responses. Moreover, 1 million people responded to both polls.
Elon Musk has stated that he is considering developing a new social networking platform.
However, Musk may advocate for changes at Twitter may be very different from those sought by a traditional activist investor, who typically aims to raise a company’s stock price.
Activists have targeted Twitter in the past
Activist investors have been a problem for Twitter in the past. In 2020, hedge fund Elliott Management advocated for reforms at the platform, possibly driving Dorsey out or requiring him to relinquish his separate CEO role at payments technology startup Square. Dorsey made it through the challenge, but he left Twitter more than a year later.
Critics on both sides of the political spectrum have turned their attention to Twitter. Some argue that the platform did not go far enough in combating misconceptions concerning Covid-19 and alleged election fraud. Others say that censoring some viewpoints, such as barring former President Donald Trump, was wrong.
Twitter’s $31.5 billion market capitalisation is a drop in the bucket compared to Tesla or rival social media behemoth Meta, which owns Facebook and Instagram. In addition, Twitter’s stock had lost more than half of its value since February 2021, when the company announced that its efforts to combat false information during the US election cost the network some users.
Still, Ives believes it would be too costly for Musk to buy Twitter on his own, mainly because most of his wealth is tied to his Tesla and SpaceX stock holdings. According to Forbes, Musk is the world’s wealthiest individual, with a net worth of $288 billion.
Elon Musk believes that Twitter’s algorithm should be open source
If Elon Musk successfully purchases Twitter, the platform may take on a new look. Musk addressed why he wants to buy the firm and the reforms he wants to make in his first public, non-tweeted statements since the saga began.
“Twitter has de facto become the town square,” he remarked. “It’s critical that people have both the fact and the idea that they are allowed to talk freely within the law.”
In terms of concrete reforms, Musk believes Twitter should open-source its algorithms and limit its content policing operations. “Any adjustments to people’s tweets, whether they’re accentuated or de-emphasis,” he continued, “should be made obvious.” “So that anyone can see that action was taken, and that there is no sort of behind-the-scenes manipulation, either algorithmically or manually,” says the author.
He also suggested that the algorithm’s underlying code be made public on GitHub so that consumers may inspect it for themselves.
Musk also discussed his perspective on content control, stating that it should be used sparingly. “I’m not claiming to have all of the solutions.” He stated multiple times that he desires to allow all legal expression and that he opposes measures such as permanent bans. “I believe we just want to be very cautious with permanent bans and reluctant to erase stuff,” he said. “I think timeouts are preferable to sort of permanent bans.”
Those remarks are unlikely to be well greeted by the Twitter staff, some of whom are said to be particularly concerned about his joining the board.
Musk’s TED talk came just hours after the Tesla CEO made a $43 billion bid for Twitter. That offer came after a tumultuous few days for Musk and Twitter, in which he revealed that he had become the company’s largest shareholder, was offered a seat on the board of directors, declined, and was later sued by Twitter shareholders for failing to report his investment to the Securities and Exchange Commission.
It’s uncertain whether Musk will be able to take over the corporation. So yet, Twitter’s board has just stated that it will “consider” the offer. “I’m not sure I’ll be able to get it,” he admitted. When asked if he had a “plan B” in case Twitter’s board of directors rejected his offer, he answered yes but declined to disclose it.
Musk verified what many people had assumed for a long time in terms of his personal Twitter account. He explained, “I’m tweeting more or less stream of consciousness.” “It’s not like, ‘Let me think about some huge plan for my Twitter,’ or something like that.” “I’m literally on the toilet thinking, ‘Oh, this is amusing,’ and then tweeting it out.”