Musk Enters the Twitter Zone with Plans to Monetize Overpriced Social Media Platform
You can feel “it.” The excitement is building on the cable news, in the Twitterverse, and on just about every other social media platform for information this week. Why is the news so exciting in particular this week? Because Friday, October 28, is the day Elon Musk becomes the guy who overpaid (by a lot) for a social media platform called Twitter that is likely doomed? At least according to many analysts and journalists. Here is what Elizabeth Lopatto of theverge.com thinks:
Elon Musk’s $44 billion acquisition of Twitter closed Thursday night. Lots of smart financial journalists have things to say about this. First of all, it’s not a very good buy.
“No one thinks the company should be valued at $44 billion,” said Andrea Walne, a general partner at Manhattan Venture Partners in early October.
She and other investors were trying to back out of the deal. (“Obviously, myself and other investors are obviously overpaying for Twitter right now,” Musk said in a Tesla earnings call.)
Twitter is an also-ran social network, one that made only $5 billion in revenue last year. It did not make a profit. But it’s had an outsized reach partly because of the active use of people such as Musk, who uses Twitter to connect to his fans, investors, and others. Heavy users include politicians and journalists, which means that Twitter influences public discourse. What Twitter does not do is make money.
And when it comes to the price he paid versus its stock value the whole thing seems like a very bad deal for Musk. However, Lopatto goes on to remind us:
Musk reportedly told investors he’ll double Twitter’s revenue in three years.
He also told them that he plans to cut 75 percent of staff, according to The Washington Post, but once the deal closed on Thursday night, he said he wouldn’t, and instead fired three top executives. He also said he would reinstate Donald Trump’s account. But also tweeted:
“Twitter obviously cannot become a free-for-all hellscape, where anything can be said with no consequences!”
Roelof Botha, PayPal mafioso and head of Sequoia Capital, thinks the deal will be a major drag as an investment for Musk.
To finance the Twitter acquisition, Musk has sold $15.3 billion of his Tesla shares: $8.4 billion in April and $6.9 billion (nice) in August. Musk doesn’t have founder control of Tesla — an attribute he shares with Steve Jobs and one that distinguishes him from the next crop of tech founders such as Zuckerberg. That may leave him vulnerable to activist investors if Tesla suffers further.
The guy who promised to put people on Mars is going to spend his days dealing with content moderation issues on a website that less than 1 in 5 Americans use? Time will tell. As a consistent maverick, it’s hard to say what he will do.
read more at theverge.com