Elon Musk Buys Twitter for 44 Billion Dollars


On April 4th, Elon Musk revealed that he had bought about 9.2% of a Twitter. This came as a massive shock to the world as it seemingly came out of nowhere. Over the next few days he almost seemed to messing with the Twitter company. First saying that he would join the company’s board of director’s, and then just days later backing out of the idea, insulting twitter on its own platform to his 80 million followers while doing so. Then on April 14th, he admitted what his true intentions were, he wanted to buy the entire company. Twitter’s executives reportedly seemed very against the idea at the time. At the investor’s meeting that occurred the next day they warned of the dangers of an Elon Musk ownership, and some insiders claimed that Twitter was even trying to put in a so called “poison pill,” in which they make the shares Elon Musk was targeting more expensive to drastically raise the price of a buy-out. If this had happened, Elon Musk might still have bought the company as at a TED conference he said, “I don’t care about the economics at all. This is just my strong, intuitive sense that having a public platform that is maximally trusted and broadly inclusive is extremely important to the future of civilization.” He stuck to his word, and on April 23 he struck a deal with Twitter shareholders to buy the social network for $54.20 a share, totaling just over 44 billion dollars for the entire sale.

So what are the financials looking like for Twitter and Musk?

Through the released security filings, it was revealed that the backing for Musk’s purchase were through 13 billion dollar debt facility from a financial bank related to Morgan Stanley, along with a 12.5 billion dollar margin loan from the same bank, and around 21 billion dollars from his own personal fortune. This money will most likely come, at least partly, from sales of his Tesla stock, which is what has made him the richest man alive, and which is why Tesla’s stock has dropped in the last few days. Although Musk said he does not care about the financials of owning the website, it will be interesting to see how its financials work under Musk, and whether this could be the thing that drops him from the world’s richest man spot. Twitter has struggled with creating a profit throughout its lifetime, and the results might not be any different with Musk at the Helm. Since the company went public in 2013, it has reported a net loss every year except for 2018 and 2019, where it profited just over 1 billion. The main component of Twitter’s revenue is advertising, a common factor of most social medias, but with recent data tracking changes, and privacy concerns, adversing pay rates have plummeted, leaving many social media companies struggling for profits. Twitter tried to remedy this problem, with the introduction of their Twitter blue service in November of 2021. At 3 dollars a month, this service provides design customization options, the ability to re-do tweets, and an ad-free experience. Whether this will be able to drive the website to a profit, and whether Musk will make changes to this service remains to be seen. Additionally one more factor to consider is the company is most likely going private. Both Musk and former co-founder, Jack Dorsey, agree that many of the changes he wants to make will not be possible in a company that is, “owned by Wall Street and the ad model.”

So what changes could be coming to Twitter? 

One of Musk’s biggest claims is that Twitter will become a safe place for free speech, suggesting in the past that the platform had stifled free speech, and and engaged in heavy censorship. He has indicated that he will loosen Twitter’s content moderation policies, and pull back on banning those who violate the website’s guidelines. Although many people think Twitter has gone too far on its censorship policies, this also raises the question if hate speech, racism, and other inappropriate comments will become rampant on the website. For example, when Parler, the social media site, became a safe haven for free speech, it was flooded with racism, white supremacy, and nazi ideology. This led to the app being kicked off the google play store just days after its popularity surge. This influx of negative content could occur on twitter as well depending on just how much the moderating policies are loosen.

There also have been questions on whether Donald Trump’s twitter account will be unbanned under Musk’s new leadership. Donald Trump has claimed he would not go back to Twitter even if his account was unbanned, but whether that is actually true remains to be seen. As for Musk, although he most likely does not want the negative attention surrounding the decision, he has raised a solid conservative fan base, and although his political ideology has been all over the place in the past, he has made several comments recently indicating his conservative political views. Additionally unbanning Donald Trump would drastically raise his clout among the republican party, and possibly give him more leeway with republican politicians, the same politicians he needs to approve favorable Tesla and Space-X plants and policies.

Finally Musk’s last major claim was that he was going to reveal how the company’s algorithm works in showing content to people, and make it the code open sourced for all to see. This is one of the more popular ideas, as there has been a lot of talk on how social medias company’s algorithms could be harmful and manipulative to its users. This will give an inside look on whether this is true for Twitter, and it will be the first social media algorithm that people will actually be able to see in its entirety.

Overall Elon Musk’s purchase of Twitter could bring a world of changes to the company’s financials, features, policies, and the actual essence of the company, but exactly what happens remains to be seen.