Elon Musk Faces a Reality Check with his Twitter Acquisition
It has been just over two weeks since Elon Musk acquired Twitter. The period has been chaotic to say the least and many believe Musk might have bitten more than he could chew by acquiring the troubled social media company.
Musk’s Twitter acquisition was full of drama, as most things associated with the world’s richest person invariably tend to be. While Musk backed out of the deal, he had to eventually agree to buy Twitter amid the legal battle, where most believe he stood little chance anyway.
To be sure, even before he acquired Twitter, there were ample signs that he intends to shake up things at the microblogging site. However, the Tesla CEO faces a tough road ahead looking at the turmoil we’ve seen over the last two weeks.
Musk has fired nearly half of Twitter’s staff and many top executives have left the company. Musk has warned that a Twitter bankruptcy cannot be ruled out. This is not the first time when the mercurial Musk has used the “B” word. He has previously warned of a Tesla and SpaceX bankruptcy as well.
At other times though, he has forecast that Tesla’s market cap could one day reach around $4.5 trillion. Tesla’s stock has been a casualty of the Twitter drama and recently fell to a two-year low.
Musk’s Blue Tick Subscription Not Going as Planned
One of the changes that Musk is driving at Twitter is to charge users for the blue tick. He touted subscriptions as a possible cure for Twitter which he said was losing $4 million a day. However, the company has put the $8 per month subscription on hold after multiple imposter accounts.
One account claimed that Eli Lilli was giving insulin for free which led to a crash in the company’s stock price. The pharma major later clarified that it was fake news. Musk has been at loggerheads with several leading personalities and has been taunting them to shell out money for their coveted blue tick verification.
Advertisers Pull Out from Twitter after Musk Acquired the Company
Twitter’s finances were anyways not in sound shape before Musk took over the company. The microblogging site is now witnessing an exodus of advertisers from the platform. General Motors, Chipotle Mexican Grill, Audi, United Airlines, Mondelez International, and General Mills are among the companies that have paused ads on Twitter.
There is more bad news for Twitter as Omnicom has recommended its clients pause their ad spending on Twitter.
Musk has warmed up to conservatives over the last year which is making those on the left of the political divide apprehensive. Musk intends to make Twitter a free speech platform which many fear would lead to the spread of hateful content.
Also, a lot of companies are worried about an increase in hate speech on Twitter following Musk’s takeover. There are already signs that hate speech is on the rise on the microblogging site. Even Musk shared a now-deleted unfounded anti-LGBTQ conspiracy theory over the Paul Pelosi attack.
Biden on Musk Acquiring Twitter: National Security Risk “Worth Looking At”
At a White House press conference, a reporter asked US President Joe Biden “Do you think Elon Musk is a threat to US national security and should the US, with the tools you have, investigate his joint acquisition of Twitter with foreign governments, which include the Saudis?”
Biden replied, “Elon Musk’s cooperation and/or technical relationships with other countries is worthy of being looked at.” He added, “Whether or not he is doing anything inappropriate — I’m not suggesting that. I’m suggesting it’s worth being looked at. That’s all I’ll say.”
Musk hasn’t shared a good rapport with Biden. Biden shunned Musk and instead invited chiefs of Ford and General Motors to discuss scaling up EV production in the country.
Political Controversy over Twitter Acquisition
Musk has also been critical of Biden and has also vowed to vote a Republican in 2024 and also offered to restore Donald Trump’s Twitter account.
Trump meanwhile turned down the offer. Notably, the former President has also launched his own social media platform called Truth Social, which has announced a merger with Digital World Acquisition Corp. (NYSE: DWAC). We have a guide on how to buy DWAC stock before it merges with Trump’s TMTG (Trump Media & Technology Group).
Musk has been working out of Twitter headquarters and has called upon employees to return to offices, ending the company’s “work from home forever.” He also admired employees putting in extra hours at the office.
On multiple occasions, Musk has shown his admiration for people putting in extra hours. He has previously lamented the sense of “complacency” and “entitlement” in US workers while praising the “hard working” Chinese workers.
All said, with his Twitter acquisition, Musk might have stretched his limit. The fallout is visible in Tesla stock also and even long-time bull Dan Ives removed Tesla from his top ideas list.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.