With an estimated user base of over 450 million, Twitter is one of the world’s most influential social media platforms. But with multi-billionaire Elon Musk completing a $44bn deal to take over the company, there are questions about the platform’s direction.
Table of contents
The deal has been surrounded by uncertainty, mostly caused by clashes between Musk and the Twitter board which led to a trial and the consequent deadline for the deal to be closed. Twitter’s stock has been unstable too, with its movements depending on Musk’s actions.
Twitter’s chief customer officer Sarah Personette tweeted that the company’s “continued commitment to brand safety for advertisers remains unchanged” but now Musk is in charge a question mark hangs over the social network’s future plans.
Does Elon Musk own Twitter now?
It took Elon Musk some time but he has completed his original $44bn deal to purchase Twitter. The billionaire, who is the largest stakeholder and CEO of Tesla, began negotiating with Twitter earlier this year.
Musk began purchasing Twitter stock in January 2022 and increased his holdings by about 5% by March. He also began contacting Twitter board members to inform them about his rising stocks, as well as starting a conversation about the potential of joining Twitter’s board.
On 4 April 2022, it was disclosed that Musk had quickly surpassed other investors to possess the largest share in Twitter, with a 9% interest valued at around $3bn.
Musk decided to postpone his purchase of the company because he claimed to need more details on fake and spam accounts on the site. He then withdrew from the deal because Twitter allegedly first refused to release this information and then provided what Musk described as inaccurate stats. Twitter executives refuted this claim.
This caused a chain reaction of legal actions: Twitter sued Musk to pressure him into closing the deal, but Musk filed a countersuit. A Delaware judge ended up mediating both parties and setting a 28 October 2022 closing date on the agreement.
Why did Elon Musk buy Twitter?
Musk justified his purchase of the social media platform (on Twitter, of course) by saying: “The reason I acquired Twitter is because it is important to the future of civilisation to have a common digital town square, where a wide range of beliefs can be debated in a healthy manner, without resorting to violence.”
The Tesla CEO reiterated that his reasoning goes beyond financial profit, but he did it to “help humanity”.
Musk also announced that the deal was sealed by tweeting a video of himself entering the Twitter HQ carrying a sink, captioning it “Entering Twitter HQ – let that sink in!”
With his acquisition, Musk is determined to make significant changes, mostly regarding free speech and inactive users. “Twitter cannot become a free-for-all hellscape where anything can be said without consequences!”, he added.
Following Musk’s takeover, it was announced Twitter’s CEO Parag Agrawal, chief financial officer Ned Segal, and legal and policy executive Vijaya Gadde are leaving the company. One of Twitter’s co-founders Biz Stone confirmed their departure via a tweet: “Thank you to [Agrawal], [Gadde] and [Segal] for the collective contribution to Twitter. Massive talents, all, and beautiful humans each!”
How has Twitter’s share price fluctuated?
Twitter’s stock price was declining in March due to rising interest rates and impending inflation. The social media platform’s advertising expenditures decreased, resulting in a decline in the stock price from $63 at its high in November to $33.
Musk began buying Twitter shares in January 2022 and by March had acquired a 5% stake in the firm. With a 9% stake, he grew to be Twitter’s largest shareholder in April. The share price increased by about 50% as the news of these investments spread.
Musk put the transaction “temporarily on hold” after making an offer to purchase Twitter for $54.20 per share, which led him to try to back out. The price of Twitter stock dropped back to the previous $33 share price range when Musk filed a countersuit against Twitter, after the company sued him for backing out.
Finally, after Musk approved the $44bn deal, Twitter’s prices increased by more than 12% once more, and ever since the social media business accepted the proposal, the share price has been between $50 and $54 ($53.90 to $54.20).
How much of Twitter does Elon Musk own?
Elon Musk made the decision to take Twitter from being a publicly traded to a privately held company, meaning that it will be exempt from the requirement to disclose financial and performance data publicly.
Free of the regulatory and shareholder pressures that come with running a public company, Musk has greater direct authority, and he will be able to directly manage Twitter’s content, policies and money, should he so wish.
The board of directors will dissolve as a result, and its nine members will no longer have any influence over the organisation. Nevertheless, Musk is still preparing to establish a new board made up of people in his inner circle and fellow investors as required by law.
Who owned Twitter before Elon Musk?
Jack Dorsey, along with Noah Glass, Biz Stone, and Evan Williams, launched Twitter in 2006. According to a regulatory filing, institutional investors formerly held control over the platform, with the Vanguard Group holding the largest position (10.3%) at that time. Investment firms BlackRock and StateStreet both held 4.75%, while Morgan Stanley Investment Management had 8.4%.
With a 10.3% stake in Twitter as of April 2022, The Vanguard Group overtook Musk as the company’s largest stakeholder prior to his takeover.
The previous CEO, Parag Agrawal, also had substantial holdings (around 128,000 shares), which would be worth almost $7m under Musk’s current agreement, which stipulates that each share is worth $54.20.
Agrawal was initially scheduled to earn a $60m severance package in addition to the proceeds from the sale of the shares. It is still unclear, though, whether Musk still plans to uphold this agreement.
How did Elon Musk pay for Twitter?
Musk made his first offer to purchase Twitter for $44 billion around the middle of April, putting the board under pressure to negotiate after securing $46.5 billion in financing to acquire the business.
After some legal conflicts due to Musk pulling out and Twitter suing him, the deal was consolidated in trial with a deadline on 28 October. When this happened, Twitter’s shares dropped while those of Tesla went up.
In order to support the purchase, other banks, including Bank of America Corp., also agreed to contribute $13 billion in loan financing. Another financial aid has been selling his Tesla stock, which also funds most of his estimated $220bln fortune.
Musk’s $33.5bn equity investment includes his $9.6% ownership in Twitter, which is worth around $4bn, as well as the $7.1bln he got from equity investors, including Larry Ellison, the co-founder of Oracle.
Image: Shutterstock
