Elon Musk Buys Twitter

• On April 25, 2022, Twitter’s board of directors announced that they accepted Elon Musk’s offer to buy the company.
• The acquisition caused Twitter’s stock price to increase by 5.7% soon after the announcement. 
• Although not all of his intentions are known, Musk plans to improve the social media platform by enhancing its free speech guidelines and removing bots. 

After a couple of weeks of going back and forth, Twitter's board of directors has decided to accept Elon Musk's deal to buy Twitter. So on April 25, 2022, Musk's offer to acquire Twitter for $54.20 a share, or roughly $44 billion, was accepted. The acquisition resulted in Twitter's stock price rising by 5.7% after the announcement, but it has also left many wondering about Musk's intentions with the social media company. 

Editorial credit: Sergei Elagin / Shutterstock.com

Elon Musk's Path to Buying Twitter 

Before speculating on what is next to come, here is a timeline of all the events leading to Elon Musk buying the company. 
 

April 5, 2022

Elon Musk announced that he had purchased a stake in Twitter, equating to 9.2% of all total shares. Musk's acquisition of 73 million shares in the social media platform made him the largest shareholder, and he was initially offered a seat on the board of directors. 

Recommended Read: Elon Musk Purchases a 9.2% Stake in Twitter

April 14, 2022

The Chief Executive Officer of Tesla offered to buy Twitter at a share price of $54.20 per share, or $44 billion. However, one day after his offer, Twitter's board of directors commenced a poison pill plan. 

The poison pill is a defensive maneuver that corporations sometimes use to prevent hostile takeovers. The plan allows current shareholders to purchase more shares at a discounted price. As a result, it becomes more difficult and expensive for the buyer to achieve their hostile takeover attempt as more shares in circulation must be repurchased. 
 

April 25, 2022

Musk still succeeded and acquired Twitter despite the poison pill plan, as the board of directors determined his offer was too good to refuse. 

Elon Musk's Plan for Twitter

In his letter to Twitter's chairman of the board of directors, Elon Musk mentioned he could take the platform to the next level by modifying aspects of the social media company. Although all of his plans for Twitter are unknown, there are two aspects in which he disclosed he would improve–free speech and removing bots. 

Free Speech

Before his acquisition, Elon Musk criticized Twitter's free speech guidelines, saying, "Given that Twitter serves as the de facto public town square, failing to adhere to free speech principles fundamentally undermines democracy." The quote was in reference to when Twitter decided to ban former U.S. President Donald Trump after his tweets incited a riot in the Capitol Building on January 6, 2021.  

Elon is a public advocate for free speech and believes social media platforms should allow people to voice their opinions freely. However, as Musk plans to change Twitter's free speech guidelines, many speculate much more hate speech will occur on the platform due to the modified restrictions.  

Removing Bots

The second piece of action Musk is taking after acquiring Twitter is removing bots who tweet a substantial amount of unwanted content. The execution of this plan relies on an algorithm that verifies a user is indeed a human. 

Musk mentioned this algorithm would be open-sourced, meaning it is publicly accessible, and anyone who wishes can view it and make any necessary changes they see fit. Of course, there is a risk that those who gain access to Twitter's codes may try to sabotage the company with the modifications they make to the code. However, with open sourcing, there are multiple levels of verification process to ensure that the revisions made to the code will be beneficial. 
 

The Money Wrap-Up

Due to the profound changes Musk is making to the social media platform, former Twitter CEO Jack Dorsey thanked Musk and current Twitter CEO Parag Agrawal for getting the company out of a tight jam. Dorsey went on to say that Musk's decision to take the company back from Wall Street was the first step in the right direction. 

Editorial credit: Michael Vi / Shutterstock.com

Elon Musk has always been a revolutionary businessman and pioneer in nearly every industry in which he has formed a company. So, although it is early in everyone's speculation about the exact direction Musk wishes to take Twitter, his unconventional business methods should make for an interesting outcome. Until then, the only thing that can be done is to wait and see what happens. 

Disclaimer: The mentioned remarks regarding Elon Musk are not considered financial advice. Should you invest in any companies in which Elon Musk is involved, do your due diligence prior to investing. CapWay is not liable for any losses made from investments based on the above information.

Thumbnail and Main Image | Editorial credit: Sergei Elagin / Shutterstock.com