The Ongoing Impacts of Musks’s Twitter Acquisition
A Billionaire’s Bold Move
On October 27, 2022; billionaire Elon Musk purchased the social media giant Twitter for 44 billion dollars. After solving all issues involved in the messy deal, it had finally been concluded, and with it the firing of several executives in the company by the new CEO. This monumental change not only made headlines across the world but also changed the future of the company significantly.
Rise Through Risky Ventures
Elon Musk made his money by launching the first successful Electric SUV under his brand “Tesla”. The car was spacious compared to the tiny electric cars of the past, it was truly a feat of engineering. The network of charging stations*superchargers) as well as the long-distance mileage caused a boom for Tesla and took the world by storm. Musk even became the world’s richest man for a short time.
Musk was always thought to be focused on futuristic technology, launching the first privately funded reusable rocket into flight as part of his company SpaceX, another amazing feat. This allowed for further revenue streams as SpaceX put astronauts on the International Space Station in a partnership with NASA.
A Social Media Visionary Emerges
To wonder why this techy CEO set his sights on social media is a common question. Elon Musk has always been a promoter of free speech and thus saw social media as a tool to project his opinions. Not only that, but he also used it to communicate over a much broader spectrum. Because of how important this was to him, he showed interest in a potential acquisition of a social media company.
Later, Musk revealed he was Twitter’s largest stakeholder on April 4, 2022. Despite refusing a seat on the board, he continued to hold significant influence in the company. He later decided to announce that he planned to acquire the company using this influence. The deal was so messy that Musk himself tried to back out, however, the threat of a legal battle with Twitter forced him to acquire it under a parent company known as X Corporation.
Financial Fallout and Post-Acquisition Decline
While the initial announcement of the acquisition caused Twitter’s stock to grow, the value of X has since plummeted, with Fidelity implying that it has fallen by 72%. Though the financial details of X are not publicly available, it’s clear that the company has not been performing as well as expected, with advertising revenue dropping significantly and the company being in 13 billion dollars of debt, resulting in a debt-to-valuation ratio of 65%.
Although X is expected to reach one billion monthly users this year, the amount of time users spend on the app has decreased considerably, according to data from Apptopia shared with Business Insider. Similarly, an analysis by SensorTower found that X users in the US (which is the company’s largest market) spend an average of 26 minutes per day on the app, lagging other social media platforms.
Navigating Legal Challenges
Twitter has declined ever since its acquisition by X Corporation. Ineffective management coupled with legal disputes has alienated users from the once inviting platform. Elon Musk will have to change his approach to solve the debt problem.
Despite the radical changes he has made, it will be hard to avoid the plethora of legal disputes it is currently involved in around the world. X must develop a comprehensive plan to restore confidence in the platform and make it appealing to users once more to prevent further loss of users and revenue. Only then can it reclaim its position as a leading social media platform and secure its future success.
References
Corse, A. (2023, March 25). Elon Musk Offers Employees Stock Grants Valuing Twitter at About $20 Billion. Wall Street Journal. https://www.wsj.com/articles/twitter-offers-new-equity-grants-to-staff-938ee7f8?mod=article_inline
Reuters. (2023, January 25). Musk explores raising $3 billion to pay off Twitter debt — WSJ. Reuters. https://www.reuters.com/technology/musk-explores-raising-3-billion-pay-off-twitter-debt-wsj-2023-01-25/
Elon Musk has wiped out 72% of Twitter’s value since taking over, Fidelity reveals in new filing. (n.d.). Fortune. Retrieved January 10, 2024, from https://fortune.com/2024/01/02/elon-musk-twitter-value-72-percent-drop-fidelity/
Hays, K. (n.d.). CHARTS: This Twitter data should make Elon Musk and his new CEO very worried. Business Insider. Retrieved January 10, 2024, from https://www.businessinsider.com/people-use-twitter-less-after-early-elon-musk-takeover-bump-2023-5
Nakajima, K., Yang, M., & Bond, S. (2022, October 27). Elon Musk has finally bought Twitter: A timeline of the twists and turns. NPR. https://www.npr.org/2022/10/27/1131378869/twitter-elon-musk-timeline
