Elon Musk is buying Twitter. Will the purchase pay off?
Twitter stock was relatively stable Thursday after the company experienced losses earlier this week that signaled investors were dubious about Musk’s $44 billion purchase of the social media platform. The company declined to issue a financial forecast, citing the pending sale.
“Given the pending acquisition of Twitter by Elon Musk, we will not be providing any forward looking guidance, and are withdrawing all previously provided goals and outlook,” the company said in a statement.
With the board of directors’ decision Monday to sell the company to Musk for $54.20 per share, Twitter is charting a new path. As owner, Musk will have unique power over a highly influential platform that shapes public opinion on politics, industries and cultural movements around the world.
In the days leading up to the deal, Musk declared himself to be a “free speech absolutist,” arguing against what he considers to be overly aggressive content moderation practices. The Tesla CEO has deemed Twitter a “de facto town square” and essential to a well-functioning democracy.
If the acquisition is completed, Musk will have significant sway in determining what kind of speech qualifies as acceptable at a time when there is widespread disagreement about social media’s role in society. He will have to decide where a company with 229 million daily active users draws the line between free expression and mitigating the real-world harms that result from speech on its platform.
Perhaps his highest-profile decision will be whether to allow former president Donald Trump to return to the site after the company banned him after the Jan. 6 riot at the U.S. Capitol.
Musk’s views on free speech, as well as his leadership style, already are raising eyebrows among employees at the San Francisco-based company.
On Wednesday, he tweeted a meme to his more than 86 million followers with the face of Twitter’s top lawyer, Vijaya Gadde, that appeared to suggest the company’s decisions are affected by a “left wing bias.” The tweet came hours after he criticized a 2020 policy decision Gadde made, and was in response to an earlier tweet from a political podcast host calling her the company’s “top censorship advocate.”
Gadde and Musk did not respond to requests for comment Wednesday.
Musk’s positions on social media content moderation put him relatively at odds with current Twitter leadership, which has made some of the most aggressive moves to punish political leaders who break the company’s terms of service.
Many rank-and-file employees are also concerned. Employees peppered Twitter’s leadership on Monday with questions about how Musk’s ownership might change the company, according to a record of the call obtained by The Washington Post. Twitter employees asked about everything from the potential for layoffs to whether the company will continue to make money from advertising. Executives offered assurances but few direct answers, and said that business would continue as usual until the deal goes through in three to six months.
Before the deal, Twitter leadership changed when Parag Agrawal, who spent four years as chief technology officer, succeeded Jack Dorsey as chief executive. Dorsey, who also runs online payments company Square, has signaled his support for Musk’s acquisition.
Musk is taking over a company that is facing steep challenges to its business model and performance. Investors have been pressuring Twitter to move faster pushing out new products to grow revenue and its user base. After activist investor Elliott Management took a stake in the company in 2020, Twitter set several ambitious goals including to reach 315 million daily active users and double its annual revenue to $7.5 billion by 2023.
Twitter has been investing in new products such as subscription services for high-volume users and its audio chatroom feature Twitter Spaces, which was meant to compete with the upstart Clubhouse. Musk has already hinted that he thinks there could be changes made to Twitter.
More broadly, Apple’s new restrictions on how apps collect information on iPhone users for the purposes of targeted advertising has negatively affected social media companies such as Facebook and Snapchat. Last year, Apple started requiring all apps to ask users’ explicit permission to track their activity across the internet — a request that many users rebuffed.
On Wednesday, Facebook parent Meta Platforms reported a modest increase in user numbers and posted profit of $7.5 billion that beat expectations during the first quarter. The company’s stock climbed nearly 14 percent on Thursday, reflecting investor optimism about the social media giant’s financial progress after three months of significant losses. In February, Facebook shocked the market when it announced stagnating user growth, sending its stock into a free fall.
Twitter is also facing economic challenges tied to the invasion of Ukraine. The platform, along with Facebook and Google, cut services in Russia as the war raged on. Earlier this week, Google executives said after a disappointing first quarter that its digital advertising business was also hurt because advertisers pulled back on their spending in Europe.
Doug MacMillan contributed reporting.