The average multimillionaire spends their money on yachts, cars and houses. But Elon Musk isn’t your average multimillionaire. The richest man in the world, whose fortune Bloomberg estimates around 260 billion dollars–followed by Jeff Bezos at 180 billion–wants to own a social network. He has offered 43.4 billion dollars (40 billion Euros) to buy Twitter at a price of 51.4 dollars per share.
That is a 38% increase from the company’s stock price as of April 1, when Musk had yet to make known his interest. Its stockholders have received the news with increases less than 1% on Wall Street, above 46 dollars but below the magnate’s offer, a sign that investors are not completely convinced that the operation will move forward.
Twitter has 217 million daily users, according to data from the last trimester of 2021. That means that Musk would pay 185 Euros for each one of them. The owner of aerospace company SpaceX and CEO of the Tesla electric vehicle company became Twitter’s largest shareholder just a few days ago, when he bought 9.2% of shares. Until then, the platform was just one of his favorite forms of entertainment, an ideal space to let loose in a content where his popularity is indisputable, as shown by his 82 million followers. (He is the account with the eighth-largest number of followers, on a list headed by United States ex-president Barack Obama, who has 131 million followers.)
Now, Musk is going a step further. He wants to take total control in a takeover bid. It remains to be seen if there will be resistance. “My offer is my best and final offer and if it is not accepted, I would need to reconsider my position as a shareholder,” Musk warned in a letter to Twitter president Bret Taylor.
The phrase can be read as a threat. Twitter’s stockholders now see their shares growing in value, but if Musk doesn’t achieve his goal and decides to sell off his share, the fall could be as sharp as the recent increase. Musk’s changing whims are not unusual: last year, he announced that Tesla would accept Bitcoin as a payment method to buy its cars, and he reversed the policy three months later, citing environmental reasons linked to the impact of cryptocurrency mining.
The current directors of Twitter acknowledged that they received the offer, but they did not give clues about whether they would accept it. In a statement, they said that they would “carefully review the proposal” before deciding what is best for the company and its stockholders. They called for an emergency meeting to address the issue.
Unlike many other wealthy magnates, Musk tends to court public spectacle, and his announcement of the investment was no different. This morning, he posted on Twitter his intention to buy Twitter. “I made an offer,” he tweeted, alongside a link to the American regulatory agency where the proposal’s details appear. Before his announcement, speculation had centered on how Musk would get involved in Twitter with his 9%. On Sunday night, there was news: Musk had declined joining the company’s board. But the bomb exploded on Thursday with his plan to add Twitter to his list of companies.
In Thursday’s missive, Musk makes clear that he does not want to take charge in order to keep the boat on its course. He explains that one of the reasons that pushed him to increase his participation was converting Twitter into the platform for freedom of speech. “Since making my investment I now realize the company will neither thrive nor serve this societal imperative in its current form,” he wrote. “Twitter needs to be transformed as a private company.”
That would involve removing Twitter from the stock exchange. And if Musk succeeds, it is likely that his changes would not stop there. Ten days ago, he posted a Twitter poll asking whether the social network should include an edit button. The option does not currently exist, so if someone publishes content that they later regret, they must erase the post and trust that no screenshots are circulating. 73% of participants in Musk’s poll voted in favor of including it.
The move brings social media back to the forefront years after other celebrated acquisitions. The increase in stock prices demonstrates Twitter’s growing influence and its current boom of users. In 2006, Google bought YouTube for 1.65 billion dollars. In 2012, Facebook took over Instagram after spending 1 billion dollars. In 2014, Mark Zuckerberg’s company again participated in a multimillion-dollar operation, acquiring WhatsApp for 19 billion dollars. And Microsoft paid even more for LinkedIn in 2016, when it bought it for 26.2 billion dollars.
If accepted, the purchase would lead to a series of questions. Twitter is one of the biggest platforms on the planet. Will Musk try to use that influence in some way to further his own interests or those of his companies? Twitter has not achieved profitability, in 2021 losing 221 million dollars despite investing 5.077 billion. Would Musk be able to make it profitable? The trend is positive: in 2020 the losses were much higher, at 1,135 million, but the company has not made a profit since 2019.
A fortune tied to Tesla
Elon Musk’s (Pretoria, 1971) position on rankings of the world’s richest people is indisputable, but his money is not in his checking account. Musk’s fortune fluctuates daily with the share prices of his companies. Electric car maker Tesla is the jewel in his crown. He currently owns around 17% of the company, whose stock market value is around a trillion dollars , the sixth largest listed company on the planet after Apple, Microsoft, Aramco, Alphabet and Amazon. His share alone is worth about 170 billion dollars. Despite the large number, Musk parted with a package valued at 16 billion dollars last year, and donated shares worth another 6,000 million to charities, which made him the second largest donor of 2021, surpassed only by the Bill and Melinda Gates Foundation.
His social commitment, also a way to reduce his tax obligations, contrasts with his position on taxing the world’s richest. Last December, Elon Musk publicly complained about the amount of taxes he pays. “For those wondering, I will pay over $11 billion in taxes this year,” he said on Twitter. The message came just a few days after getting involved in a Twitter debate with Democratic Senator from Massachusetts Elizabeth Warren, who had asked to tighten taxation policies so that Musk would pay taxes and “stop freeloading off everyone else.” The billionaire responded harshly:
“If you opened your eyes for 2 seconds, you would realize I will pay more taxes than any American in history this year.”