Elon Musk, the world’s richest man, said he wanted to own one of the most recognized social media platforms. However, he took his words back not long after.
In October 2022, Musk tweeted, “The bird is freed.”
It was a shocking statement from the revolutionary entrepreneur who had paid $44 billion to purchase Twitter. However, since April, when Musk first expressed interest in buying Twitter, he has made a series of choices that have confused the public and left people questioning his motives.
Musk has started dismantling the company, laying off thousands of employees and making up plans to revamp the website as he goes along.
How Did Elon Musk buy Twitter?
Musk, who has 115 million Twitter followers, has been portrayed as a lover, critic, and judicial foe throughout the story. Here is the detailed timeline of Musk’s attempt to buy Twitter and the events following his purchase:
On April 5, Musk purchased more than 9 percent of Twitter’s shares. The original suggestion was made that he should become a board member. To avoid a violent company takeover, Twitter decided to “poison-pill” Musk.
However, he bid to purchase Twitter for $44 billion, or $54.20 per share. His hope was that, what he considered, the poorly managed Twitter can improve by introducing ideas of free speech.
Recognizing Twitter’s “extraordinary potential,” Musk said he was willing to utilize his cash and borrowings to finance the purchase. As of mid-November, 2022 Tesla’s stock had lost half its value.
On April 25, Twitter decided to take Musk’s bid.
After learning more about the prevalence of spam and bot profiles on Twitter, Musk announced on May 13 that he was “temporarily pausing” the acquisition deal.
Despite Twitter’s repeated claims over the past few years, it came to light that 5% of its user profiles were fake. Musk insists he is still dedicated to the agreement, but doesn’t stop tweeting about issues he noticed.
Twitter responded with a statement saying Musk had already committed to the $44 billion dollar deal and that the company planned to close on said deal and implement the merger agreement.
Musk had yet again ignored repeated demands for comment. Twitter strongly refuted these allegations and insisted on moving forward with the agreement. Company officials asked Musk to an all-hands gathering on June 16, and he participated virtually.
Since the two parties could not resolve their conflict over the bot issue, Twitter went on to sue Musk in Delaware court to uphold a $44 billion arrangement on which he attempted to renege.
In the end, Musk filed a countersuit, charging Twitter with fraud.
A former Twitter employee submitted a whistleblower complaint in July claiming negligent operational security practices at Twitter, and the complaint was made public in August, seemingly unconnected to the purchase. In September, he appeared before a Senate committee and said that when it comes to security, Twitter is “a decade behind industry standards.”
Meanwhile, Judge Kathaleen McCormick sided with Twitter in crucial pre-trial petitions as Musk and Twitter fought for position before the October trial.
Markets were increasingly predicting a judgment in favor of Twitter, so Musk stated that he would renew his offer to purchase the business for $44 billion if Twitter promised to head off a trial. Twitter did not elect to do so, but Judge McCormick gave the parties until the end of the month to settle.
The Washington Post stated that Musk planned to cut off thousands of workers as the purchase closed. Twitter’s general counsel went on to warn employees not to trust the so-called “rumors” that Musk had laid off half of the company’s workforce. Musk assured Twitter’s marketers that the platform would not devolve into a “free-for-all hellscape.”
On October 28, Musk finalized the purchase, assumed control of Twitter, and quickly dismissed several high-ranking employees, including CEO Parag Agrawal and policy head Vijay Gadde.
So why did Elon Musk fire all the top Twitter executives?
After purchasing Twitter, Musk reportedly dismissed several top executives under the pretext of saving company money on compensation.
After completing his $44 billion transaction, he fired Twitter’s CEO Parag Agrawal, CFO Ned Segal, legal head Vijay Gadde, and general counsel Sean Edgett.
According to The Information’s sources, the real reason why Musk fired the execs “for cause” was to escape paying them compensation and forfeiting their unvested stock rewards. It indicated that he had grounds for firing them.
Courtney Yu, head of research at Equilar, told Reuters that the potential payments could reach $122 million, and execs would be getting these payments unless Musk had cause for termination, with the grounds in these cases usually being that they violated company policy.
Before completing his transaction, Musk had been vocal in his criticism of Twitter’s operations and officials, specifically regarding the company’s handling of the growing number of fake accounts. In particular, he and Agrawal soon became estranged and engaged in a Twitter and text message war.
According to The New York Times, Musk will announce more cuts soon to meet a November 1 date for workers to obtain equity awards as part of their pay. These benefits comprise a sizeable chunk of most Twitter workers’ total pay.
Why did Twitter lay off at least 200 employees?
From 7,500, Twitter now has fewer than 2,000 employees.
Approximately half of Twitter’s workforce was gone in early November, just a week after Musk took control of the business. These reductions followed the widespread layoffs that occurred then. Since then, Twitter has lost a significant portion of its workforce (around 2,000 people) due to minor cutbacks and resignations.
Musk stated that it was done solely for the purpose of stabilizing the company.
How Does Elon Musk Make Money from Twitter?
Musk is leaving no stone unturned in his quest to increase revenue at the social media enterprise.
In November 2022, Musk began monetizing Twitter’s “blue check” authentication program. A blue check verifies the user’s identity and essentially guarantees that they are who they claim to be. The blue check has been folded into the “Twitter Blue” membership service, and now anyone can receive one for an $8 monthly charge.
The new CEO of Twitter is under intense pressure to generate instant results and profits from the biggest leveraged acquisition in the history of the technology sector, as evidenced by the company’s current flurry of product development.
However, Twitter produced less money than it now pays its financiers yearly, with a cash flow of less than $1 billion in 2018, partly due to a one-time penalty. The business was also red for eight of the past ten years. Musk needs to increase Twitter’s income or reduce expenses, or both if the company is to remain solvent.
Did Elon Musk Gain Enough Profits Since He Took Over Twitter?
It looks like the wealthiest man in the world is breaking history with his wealth destruction.
Neither Tesla’s shares nor Musk’s personal finances have benefited from his $44 billion acquisition of Twitter. Since news of Musk’s interest in Twitter broke in April, he has sold $23 billion worth of Tesla shares, making him the company’s most significant stockholder.
Tesla investors would prefer that Musk devote more time and energy to his much more significant and valuable business than to Twitter, which he now leads as CEO, and to his continuous posting and increasingly unpredictable behavior. Musk has responded to critics by claiming he hasn’t skipped a “major” Tesla conference since becoming Twitter’s official spokesperson.
If Tesla’s stock recovers, Musk may reclaim the title of the wealthiest individual on the planet. However, Musk’s image suffered a significant hit in 2022 – almost like the decline in his fortune.
Is Elon Using His Personal Wealth to Fund Twitter?
In terms of wealth, Elon Musk has accumulated the most fortune of anyone alive today. However, he only spent $44 billion on purchasing Twitter. He then employed a strategy known as a leveraged buyout to finance the remaining $13 billion of the purchase with loan funds. As a result, Twitter will be responsible for repaying the debt, not Elon.
In the 1980s, corporate predators frequently used debt to fund the acquisition of profitable businesses, ushering in the peak of leveraged buyouts. But the Twitter purchase is an entirely different entity. As its workers depart in bulk and its ad earnings continue to decline, the banks that put up billions to fund the transaction may be having second thoughts.
What’s next for Twitter?
Musk’s tenure as Twitter’s proprietor has been nothing short of eventful, with Musk bringing a sink to Twitter HQ and firing half of the company’s worldwide staff. Every day, it seems like a new scandal or development at the business or on the platform is making headlines: a shift in management, the introduction and subsequent withdrawal of a verified membership, or the fear of termination for distantce workers.
Finding Success with Premium Service
To be sure, Musk’s rocky start as “chief twit” is no certainty of failure. It would be a mistake to write off Musk’s chances of success so quickly, especially given the prevalence of alternatives to his elite services in trade, messaging, romance, gaming, and pornographic material. Musk could make money by catering to people interested in pornographic material, one of the internet’s most lucrative sectors, and one of Twitter’s uses. The new proprietor of Twitter will need considerable finesse to walk the tightrope between innovative features that drive traffic and offensive material that turns off users and potential revenue generators.
Not Enough Content Moderation and Too Much Extremism
Musk has been open about his desire to increase the platform’s diversity of opinion and expression. He has re-invited people with views similar to his to the platform, including Donald Trump, Kathy Griffin, Babylon Bee, and Jordan Peterson. They were all banned for various reasons, from transphobia and mimicry to inflammatory hate speech.
Difficulties with Site Maintenance Technology
It may be difficult for Twitter to keep up with its technological infrastructure and safeguard the site from privacy and cybercrime risks because of the departures and firings of so many programmers and policy staff.
Reports indicate that staff turnover within the privacy and security teams with experience in mitigating these risks has left the organization in disarray, significantly increasing the challenges of running the site and safeguarding users.
Protecting consumers from malicious actors and maintaining millions of lines of code is no easy task.