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Elon Musk Wants Twitter. But Is It Only About Free Speech?
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Elon Musk, the controversial and eccentric owner of Tesla (TSLA - Free Report) , the world’s leading electric vehicle (EV) company, has made a bid for Twitter . Musk is offering $43 billion for the company, or $54.20 a share, according to various media sources, representing a premium of around 40% from Twitter’s stock price before the announcement.
Musk has been accumulating shares since January and reached a 9.1% stake on April 4, after which he made the bid. He is currently the second largest shareholder after Vanguard. Musk rejected an offer from Twitter’s board to restrict his ownership to 14.9% in exchange for admission to the board. He appears ready to go all the way in a hostile takeover if necessary.
Twitter’s board, anticipating a proxy fight, responded by adopting a poison pill that goes into effect if any party acquires a 15% stake without prior approval. This entails the distribution of fresh shares at a discount that would dilute Musk’s stake and make the acquisition that much more expensive for the billionaire (since he would have to acquire more shares at the offer price).
That’s when Musk took to Twitter to collect public support and “exposed” the directors who hardly hold any shares, tweeting that their “economic interests are simply not aligned with shareholders.” Twitter co-founder Jack Dorsey also criticized the board on Twitter. And Dan Ives of Wedbush Securities pointed out that "They [the board members] also have to give themselves time to try to find another potential buyer."
At any rate, this explains why Twitter shares remain subdued, trading well below Musk’s offer price.
Why Is Musk After Twitter?
Musk wants to take the company private to unlock its potential, the way many other companies are acquired. But this potential doesn’t necessarily have anything to do with profits.
"This is not a way to make money.... I don't care about the economics at all," he said at the 2022 TED conference on Thursday. "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 is that passionate about protecting the “public square” that Twitter is today.
It's also about the truth apparently. "The truth matters to me, a lot," he said. "Sort of pathologically, it matters to me." But in this age of relativism, we’ll have to wait and see if such absolution counts. In the end.
Some practical improvements that he has promised are an edit button that will be available for a short period of time that will take care of all the retweets and favorites as well.
The question is, is there more to the story?
While this is purely surmise, there are certain obvious benefits that may have motivated him. A leading social media platform with presence across so many countries brings a ton of data that he could use, especially to build his brain machine interface technology.
Founded in 2016, Neuralink (his company building this technology), has developed an implantable device and a robot that can efficiently implant the device in the brain. However, although the mechanics are in place (and critics say that they are mostly copied from a large number of other companies that actually developed the technology), it is very basic in neurological terms. And Musk needs a ton of data that can bring more intelligence into the implanted device.
The concern that appears to be driving him is that it won’t be long before machines are smarter than humans. His analysis of the advancements Google is making with DeepMind (Musk was an early investor in this company) leads him to believe that this will happen sooner than we think. So his thinking is, "We will not be able to be smarter than a digital supercomputer, so, therefore, if you cannot beat 'em, join 'em."
With AI implanted in our brains, human beings will be able to keep up with machines, or so the thinking goes. There’s also a bonus. These devices could be good at fixing mental issues like trauma, stress and so forth. More ambitious goals are in the treatment of Parkinsons and Schizophrenia.
So Musk needs data to make all this happen. And Twitter could be where he gets it from. Dan Ives seems to think that Musk will succeed. "This soap opera will end with Musk owning Twitter after this aggressive hostile takeover of the company," he said.
Share Price
Both Twitter and Tesla shares reacted to the news positively at first, before dipping lower, as it it’s still far from a done deal.
One-Month Price Movement
Image Source: Zacks Investment Research
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Elon Musk Wants Twitter. But Is It Only About Free Speech?
Elon Musk, the controversial and eccentric owner of Tesla (TSLA - Free Report) , the world’s leading electric vehicle (EV) company, has made a bid for Twitter . Musk is offering $43 billion for the company, or $54.20 a share, according to various media sources, representing a premium of around 40% from Twitter’s stock price before the announcement.
Musk has been accumulating shares since January and reached a 9.1% stake on April 4, after which he made the bid. He is currently the second largest shareholder after Vanguard. Musk rejected an offer from Twitter’s board to restrict his ownership to 14.9% in exchange for admission to the board. He appears ready to go all the way in a hostile takeover if necessary.
Twitter’s board, anticipating a proxy fight, responded by adopting a poison pill that goes into effect if any party acquires a 15% stake without prior approval. This entails the distribution of fresh shares at a discount that would dilute Musk’s stake and make the acquisition that much more expensive for the billionaire (since he would have to acquire more shares at the offer price).
That’s when Musk took to Twitter to collect public support and “exposed” the directors who hardly hold any shares, tweeting that their “economic interests are simply not aligned with shareholders.” Twitter co-founder Jack Dorsey also criticized the board on Twitter. And Dan Ives of Wedbush Securities pointed out that "They [the board members] also have to give themselves time to try to find another potential buyer."
At any rate, this explains why Twitter shares remain subdued, trading well below Musk’s offer price.
Why Is Musk After Twitter?
Musk wants to take the company private to unlock its potential, the way many other companies are acquired. But this potential doesn’t necessarily have anything to do with profits.
"This is not a way to make money.... I don't care about the economics at all," he said at the 2022 TED conference on Thursday. "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 is that passionate about protecting the “public square” that Twitter is today.
It's also about the truth apparently. "The truth matters to me, a lot," he said. "Sort of pathologically, it matters to me." But in this age of relativism, we’ll have to wait and see if such absolution counts. In the end.
Some practical improvements that he has promised are an edit button that will be available for a short period of time that will take care of all the retweets and favorites as well.
The question is, is there more to the story?
While this is purely surmise, there are certain obvious benefits that may have motivated him. A leading social media platform with presence across so many countries brings a ton of data that he could use, especially to build his brain machine interface technology.
Founded in 2016, Neuralink (his company building this technology), has developed an implantable device and a robot that can efficiently implant the device in the brain. However, although the mechanics are in place (and critics say that they are mostly copied from a large number of other companies that actually developed the technology), it is very basic in neurological terms. And Musk needs a ton of data that can bring more intelligence into the implanted device.
The concern that appears to be driving him is that it won’t be long before machines are smarter than humans. His analysis of the advancements Google is making with DeepMind (Musk was an early investor in this company) leads him to believe that this will happen sooner than we think. So his thinking is, "We will not be able to be smarter than a digital supercomputer, so, therefore, if you cannot beat 'em, join 'em."
With AI implanted in our brains, human beings will be able to keep up with machines, or so the thinking goes. There’s also a bonus. These devices could be good at fixing mental issues like trauma, stress and so forth. More ambitious goals are in the treatment of Parkinsons and Schizophrenia.
So Musk needs data to make all this happen. And Twitter could be where he gets it from. Dan Ives seems to think that Musk will succeed. "This soap opera will end with Musk owning Twitter after this aggressive hostile takeover of the company," he said.
Share Price
Both Twitter and Tesla shares reacted to the news positively at first, before dipping lower, as it it’s still far from a done deal.
One-Month Price Movement
Image Source: Zacks Investment Research