Decoding A New Twist In The Musk-Twitter Saga

by Tushar Gupta - May 13, 2022 07:05 PM +05:30 IST
Decoding A New Twist In The Musk-Twitter Saga

Elon Musk
Snapshot
  • The bigger question, however, for Twitter shareholders is how much value the platform has without Musk, and if the platform’s left-leaning bias, one that is now evident, can ensure a sustainable financial future for the company.

One of the biggest tech acquisitions in recent history is now on hold, for Elon Musk wants a reevaluation of the fake/spam/bot accounts on Twitter.

Of the 229 million users on Twitter, Musk wants to reaffirm that the bot/fake accounts represent less than 5 per cent of the total user number. A couple of hours after sharing the news story on his Twitter timeline, Musk tweeted that he was still committed to the acquisition.

The markets, however, disagree. Twitter’s share price has been in a free fall since the announcement, tanking by more than 20 per cent. From its high of $54-odd, the price Musk agreed to a month ago, Twitter’s share price is now trading at around $38-odd. The fluctuation in the share price is expected to last across the day, given Musk’s mixed signals on the acquisition.

What does one make of this new twist in the Musk-Twitter saga?

One, the current deal could fall apart.

To begin with, $44 billion-odd was too high a price to pay for a social networking site. Musk, in his interactions with the media, defined Twitter as the ‘least bad public square’, and stated that a lot could be done with it if the scammer accounts were done away with. Musk has also advocated the idea of making the algorithms public, a move that would be shockingly unconventional for the existing giants in Silicon Valley. Given his history with bitcoin, it is not unthinkable that the deal may fall apart.

Two, Musk wants to renegotiate a price. It began with Musk acquiring 9-odd per cent in Twitter, and then making a complete bid. A failed resistance and urgent securing of finance through loans and the sale of Tesla shares have now made it possible for Musk to acquire the platform. However, in case the number of spam accounts does exceed 5 per cent, the estimate Twitter stated in its last quarterly report, the $44 billion could be diluted by a significant amount. The deal may go through but will come at a discount for Musk.

The bigger question, however, for Twitter shareholders is how much value the platform has without Musk, and if the platform’s left-leaning bias, one that is now evident, can ensure a sustainable financial future for the company devoid of ideas and plagued by conflicts with several governments across the globe.

Also, there is the imminent threat of the metaverse revolution that may make the platform redundant altogether, in a few years.

Perhaps, Twitter shareholders need Elon Musk more than they realise.

Tushar is a senior-sub-editor at Swarajya. He tweets at @Tushar15_
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