When your personal fortune hovers around a quarter-trillion dollars, you can afford some mighty high dudgeon.
Three days after allegedly declining the seat he was initially offered on Twitter’s board following his purchase of 9.1% of the social media company’s stock, Tesla and SpaceX CEO Elon Musk launched a hostile takeover bid Thursday (April 14), offering $43 billion for 100% of its stock.
The offer, which he revealed with an understated tweet — “I made an offer” — linking to a Schedule 13D filing with the Securities and Exchange Commission (SEC), represents a 38% premium over its existing price.
I made an offer https://t.co/VvreuPMeLu
— Elon Musk (@elonmusk) April 14, 2022
The offer also represents a 54% premium over the price of Twitter when Musk began secretly buying his stake, which points to just how big of an impact his attempt to join the board and influence the company had on its price to begin with.
In a letter to Twitter Chairman Bret Taylor attached to the filing, Musk framed his bid as both an attempt to boost an underperforming share price and to reinvigorate a company that has been creatively and developmentally stagnant lately.
“I invested in Twitter as I believe in its potential to be the platform for free speech around the globe, and I believe free speech is a societal imperative for a functioning democracy,” he wrote. “However, since making my investment, I now realize the company will neither thrive nor serve this societal imperative in its current form. Twitter needs to be transformed as a private company.”
Noting that the $54.20 per share bid was his best and final offer, Musk said, “Twitter has extraordinary potential. I will unlock it.”
Musk isn’t the only big investor with this opinion. Founder and CEO Jack Dorsey was forced out last year by billionaire investor Paul Singer, whose Elliott Management bought a large stake in 2020, and Silver Lake’s Egon Durban and Jesse Cohn, who did the same. The firms sought to unlock value, demanding aggressive growth of 20% in monetizable daily active users (mDAUs) — something it achieved in four quarters, according to Statista. The company ended 2021 with 217 million mDAUs but has a goal of 315 million by the end of 2023, CNBC reported.
And Then What?
Musk has used Twitter as a hugely effective bully pulpit, racking up 81.6 million followers. He has used it to move markets, most notably the price of Tesla itself with an Aug. 7, 2018, tweet that he had an offer to take the automaker private for $420 per share — a number that was both a substantial premium over its existing price and a joke referencing marijuana’s “420” nickname.
That fake offer pumped the electric car maker’s stock 6% and enraged the SEC, which fined Musk and the company $20 million each, forced the addition of independent board members, and made Musk step down as chairman, saying the tweet “lacked an adequate basis in fact.”
What’s less clear is what the famously mercurial Musk — the second-richest person in the world — would do with, and to, Twitter if he gets hold of it.
Aside from focusing the attention of an already unfriendly SEC — note the 420 in the offered price — Musk’s free speech could bring back the hate speech and political censorship debate that entwined the social media firm when it began adding notes calling some tweets untruthful and blocking others outright during the 2020 election campaign, including the account of President Donald Trump, who was in office at the time.
Beyond that, his suggestion that Twitter users be allowed to edit posts instead of just deleting them would bring up similar speech and truthfulness issues.
And then there’s his Dogecoin obsession, having driven the memecoin’s price through the roof in 2021 by tweeting his support.
He has also moved the cryptocurrency market dramatically, causing the price of bitcoin to move to the tune of billions. And he turned Dogecoin from an obscure token created as a joke in 2013 into a top 10-15 cryptocurrency (currently No. 11) that is gaining credibility — well, utility at any rate — as a payments coin.
Dogecoin, listed as DOGE on cryptocurrency exchanges, shot from $0.009 to as high as $0.73 over the course of 2021 — it has stabilized this year in the $0.11 to $0.15 range — based on essentially nothing but Musk’s somewhat tongue-in-cheek support via a series of irregular tweets ranging from conflating it to Simba in “The Lion King” to buying some for his son to make little X a “toddler hodler.” The latter refers to a crypto-insider term for a long-term “holder” of a token, generally bitcoin.
ur welcome pic.twitter.com/e2KF57KLxb
— Elon Musk (@elonmusk) February 4, 2021
Dorsey, a strong, loud and increasingly influential bitcoin booster, decamped to his payments FinTech Block, developer of Cash App — an early and progressively important player in bitcoin payments. Ark Invest’s Cathie Wood revealed Monday (April 11) that she had sold off PayPal holdings to double down on Cash App, calling its “singular focus of bitcoin” payments “critical.”
That came after bitcoin payments firm Strike revealed that by using the Lightning Layer2 blockchain to bypass bitcoin’s high fees and low scalability, it had cut deals to bring bitcoin payments to eCommerce and point-of-sale (POS) payments firm Shopify, prepaid payments provider Blackhawk Network, and leading POS terminal maker NCR.
Despite that, Dorsey’s aggressive support of bitcoin payments only transferred over to Twitter in a minimal way, with the company announcing in September that it would allow followers to tip their favorite content creators with BTC.
Other social media firms have been far more aggressive in moving into payments, most notably Meta. Back in June 2019, the company, then known as Facebook, announced a massive stablecoin payments project that would bring the fiat-backed Diem coin (initially known as Libra) to all its 2.3 billion users, making a payments network untethered to any currency and usable virtually anywhere.
After that fell amid a chorus of outrage and terrified central bankers, regulators, financial organizations and politicians, the company pivoted, announcing plans to bring the dollar-backed and dollar-pegged Pax Dollar (USDP) to its WhatsApp messaging service’s 2 billion users. That was followed quickly by news that Instagram will soon support non-fungible tokens (NFTs).