Elon Musk, the famous founder of Tesla and SpaceX, made the news today when he purchased Twitter for $42.2 billion dollars in an all-cash deal that was backed by Goldman Sachs.
This acquisition has left many wondering what Musk plans to do with the social media company and how his plans will affect Twitter’s current users and investors. After this acquisition, here are some of the things we can expect from Elon Musk and Twitter in the future.
How Does He Purchase it?
Elon Musk, founder of Tesla and SpaceX has purchased twitter, and not just a small portion but 100% of the shares available, how did he do it was really simple. Elon himself stepped in as an investor which instantly made him a top shareholder, then he used his newfound power as a shareholder to say that he wanted to buy all of Twitter which wouldn’t have been possible if Elon hadn’t already proven himself as one of Twitter’s top shareholders. So now that you know how Elon became an owner of such a large social media platform what does he plan on doing with it? The answer is nothing for now!
Elon has stated he is not planning on making any changes to Twitter for now and that its purpose is a digital town square, a place where people can come together, discuss what’s going on in their lives and interact with one another. Elon is working with Parag Agrawal who currently serves as CEO of Twitter, as they plan to work together to help make it happen. In fact, Elon has already helped Twitter by getting rid of other companies’ spambots. The number of bots was getting out of hand according to Elon so he worked with Jack and got rid of over 200,000 spam accounts in an effort to make Twitter better for everyone.
Why Did He Purchase It?
It’s hard to know exactly why Elon Musk purchased Twitter, but given his background in technology and social media, he clearly saw some benefit in owning it. It seems likely that he has big plans for it, especially with his tendency toward under-promising and over-delivering. A quick look at what he accomplished with Tesla should give us a good idea of what’s possible going forward. No one can be sure exactly how long Elon will own or operate Twitter; at least, not yet. If history is any indicator though, we should be expecting big things from Elon Musk and our favourite 140 character sharing tool.
Some may think Elon Musk made a bad decision when he decided to purchase Twitter. There are those who feel as if their privacy could be compromised by him owning such an influential platform. However, Elon’s track record proves that you can never count him out of anything so it is hard to say whether or not he will actually do something negative with Twitter in mind. Some people may feel as if there is no reason for anyone other than celebrities and news organizations to have accounts on there, but I would venture to guess that Elon has some ideas about how they could make money off of advertising space. Hopefully, they won’t end up using my account information without my permission!
What Will He Do With It Now That He Owns It?
Elon Musk purchased twitter in a deal that closed on Thursday. He’s said that he has no plans to do anything with it for now, but lots of people are wondering what his intentions are. Why did he purchase it? Will he make changes or simply keep it up and running as is? The possibilities are endless because he didn’t disclose how much he paid for it or why he wants to own it, but we can speculate about why Elon Musk would want control over an existing platform like Twitter instead of creating something new from scratch.
Who Will Buy Him Out In The Future And At What Price?
Investing in social media stocks is risky for companies like Tesla, whose success relies on building cool cars and being a legitimate clean energy company. Taking an ownership stake in Twitter could become problematic if Elon has to focus more on his social-media presence instead of pushing out new product lines or lowering production costs. It’s going to be extremely difficult for Musk to convince investors and consumers that he’s putting forth all his effort into making electric cars if he’s spending a significant amount of time cultivating his online following through tweets and Periscope videos. For now, it seems as though Elon isn’t thinking about how owning a piece of Twttr will affect Tesla’s image and stock price—he just wants an opportunity to tweet without all those pesky stockholders looking over his shoulder.
Will This Help Or Hurt Tesla’s Stock And Reputation
Musk’s purchase could be problematic for Tesla and his other companies, as it will inevitably raise questions about whether he has too many competing interests. Moreover, it raises questions about why a CEO of one company would want to own another company. Finally, as Electrek points out, Musk also runs SpaceX—it wouldn’t be surprising if he wanted to buy SpaceX stock when that company goes public in a few years. Owning both Tesla and SpaceX stocks would make for an interesting portfolio mix, but not necessarily one that inspires confidence in investors. For example: Imagine you were an investor in Tesla or SpaceX (or both) and discovered your founder-owned another major asset class unrelated to his companies.
For example, if you owned shares in Apple and discovered your CEO also owned Walmart stock, you’d probably wonder why he was buying it. The obvious answer would be that he thinks Walmart will outperform Apple and drive his net worth higher—but why not just buy more Apple stock instead of investing in a competitor? This kind of portfolio mix does little to inspire confidence from investors. Having said that, Musk is a high-profile tech figure known for taking big risks with his businesses. For some reason, investors have tended to assume that risk results in reward—so long as there’s no clear conflict of interest involved. Will that dynamic change now that Musk owns another major asset class unrelated to Tesla or SpaceX?
In short, his purchase may not be ideal from a conflict-of-interest perspective, but it’s hard to predict whether it will have a meaningful impact on Tesla or SpaceX stock. The market doesn’t seem to think so: as of writing, Tesla stock is up 1%. Still, investors should remain aware of any potential problems that could emerge in the coming months and years—they’ll need to decide whether they want to hold their stocks while Musk owns another major asset class.
