Tesla tycoon Elon Musk’s hostile takeover bid of Twitter is being seen by analysts as a battle for control of all-powerful algorithms that influence our newsfeeds. They feel it could be the change that Twitter needed though, at the same time, there are misgivings about the impact of taking the popular media platform private, especially on free speech and narratives.
Sanchit Vir Gogia at Greyhound Research said that Elon Musk must be credited for the timing of the offer. “Twitter has only recently seen leadership and board changes, which has been a source of displeasure and panic for many shareholders. Not everyone is aligned with Twitter’s current product strategy and overall management approach. The fact that the company’s stock has been somewhat choppy over the past year confirms the need for immediate change at Twitter.”The Hindu Business Line
Additional analyst comments:
Billionaires using public platforms to change the narrative or further their ideas is always a risk, and we have heard similar concerns with Jeff Bezos owning The Washington Post. But given how Elon Musk has used Twitter to push the envelope on free speech, it is highly unlikely he will use Twitter for any ulterior motives. However, one can never rule out any possibility, especially when a company goes private and all decision making happens behind closed doors.
The risk of free speech being curbed will always exist, but there’s always a possibility of Elon Musk launching a rival platform. Given his clout, he can easily onboard millions of users right at the onset (at the time of penning this note, his total follower base stands at 81,870,875). While the likeliness of that happening is quite slim, one can never rule it out as an option for someone like him who has access to the world’s top resources and enough and more access to capital.
Coming back to Twitter, how Elon Musk will fund this acquisition will be interesting to watch – he doesn’t have as much cash in the bank, nor does Twitter’s current cashflows allow sufficient leverage to raise as much debt. But that apart, we need to be watchful hereon if Elon Musk cannot complete this acquisition. He can well be expected to be rather vocal for change and play the role of an activist investor. This will translate to him using the platform and other mediums of communication to influence both retail and institutional investors to push for change at Twitter.
It might be noteworthy that such strategic changes can only be institutionalised when the company is taken private and away from public scrutiny. And that’s what Elon Musk is suggesting. The fact is until the team has the QoQ pressure, it will never be able to make bold and aggressive changes that need out of the box moves. It might help to know that even companies like Dell had to go private to change their product lines, teams, sales practices, etc. Then, of course, it bounced back into public markets and has been doing rather well since. Having said that, going private does mean a ton of ruthlessness, and that, combined with Elon Musk’s unusual management style, has many concerned, if not worried. But this has proven to be rather effective in the past. And maybe it is what is needed to up the ante for Twitter.
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