Why is Elon Musk buying Twitter stock?
What is Elon Musk up to with buying large chunks of Twitter stock? Why would he want this investment? The company has limited financial prospects with its current business plan and policies. It is a very nice play-thing for many of us, but an effluent fountain of fear for others.
Is it not enough to change the way the world travels, communicates and lives? He wants to colonise Mars with re-usable methane-burning rockets which will be refuelled in space. Now he must get involved in world peace, too?
Musk accumulates Twitter stock
Musk started buying Twitter stock at the end of January 2022. He had accumulated 5% of the company as early as 14 March. At that point he was required to make a regulatory filing to The Securities and Exchange Commission in the USA (“SEC”). He did not. Instead, he started asking his followers about their opinion of free speech on Twitter, and “what should be done?” He even suggested to his followers that he may start up his own Twitter-like platform in opposition. He continued to buy Twitter stock on the quiet.
On Monday 4 April he already owned 9,2% of the Twitter, and was then the biggest single shareholder in the company. He finally made his SEC submission, effectively declaring that he had no intention of making a play for management of Twitter. His actions leading up to the announcement, and subsequent to it, suggest otherwise. That has now been corrected.
Once he announced his 9,2% position, the board invited him to take a seat on the board, effective 9 April. He accepted. They breathed a sigh of relief because it would be good to have Musk in a position of fiduciary responsibility where he would have to act in the best interests of all the shareholders and the company. Part of that deal was that he would be limited to acquiring 14.9% of the stock.
On the morning of 9 April Musk announced that he had changed his mind and would not take up a seat on the board. Perhaps he realised that it would be difficult to post Twitter polls asking if the “W” should be removed from Twitter’s name. He really did tweet this, and then deleted the post.
All this drama, only five days into the time after Musk’s initial (and late) SEC filing. But he still owns almost 10% of Twitter which is a crap investment. It pays no dividends, and not just because it makes no profits. Its policy is to pay no dividends.
What would Musk do with Twitter?
Elon Musk, in his recent tweets has espoused his love for the first amendment to the USA Constitution: the right to freedom of speech. He has also stated that if it were up to him, Donald Trump would never have been banned from the platform.
The problem with free speech in USA, in my opinion, is that there is no discernable means for tempering the freedom of anybody to say just about anything, about just about anybody. As we saw with Trump, the requirement for truth, accuracy, and consideration just don’t exist. The remedy for any harm caused is through an extremely expensive legal system. E. Jean Carroll has spent years and likely millions to have Trump held accountable for his attack on her.
The informal remedy is for activist groups to throw outrage and boycotts at perceived offenders. That has given rise to a counter-activism chant of “woke” and “cancel culture”. It’s all very stressful and unpleasant, but worse, it is divisive within countries and communities.
In South Africa we have hate speech legislation to temper the worst of this. It is not always effective, particularly when prosecuted by politicians who can only call themselves to testify as expert witnesses.
Twitter is a problem with no solution in sight. One thing that Musk has been very vocal about is the need to rid it of all its bots and spam accounts. I’m all for that. I suppose the richest man in the world can afford to put some resources into making Twitter better for all of us. I hope that is his intention.Musk fanboy here
EDIT: This section is the original suck-up garbage I posted about my admiration for Elon Musk in mid May 2022. Through the months of BS from Musk which have followed I changed my attitude diametrically. You can read my updated views here. My original gushing is here for posterity. With apologies.
I am a great fan of Musk, and I follow his exploits closely. He is an engineering genius, a considered risk taker, a leader from the trenches. He has the most amazing foresight at times. Everybody knows this.
The “Boijie from Pretoria” rags to riches story is a bit thin on accuracy, but still, he is kinda one of ours.
It appears he will take us to Mars, certainly back to the Moon, and I look forward to being part of the Starlink network when it becomes available in South Africa in 2024. Or 2025. Or whenever.
Before the current geo-political tensions arose, I thought the Tesla share price was a little under par. The Chinese domestic economy in particular, and the global economy in general may change that.
But I’m not sure that I am comfortable with an engineer and businessman having an influence on a powerful social engineering platform like Twitter. When the engineer is wrapped up in narcissist tendencies… well, have we learned nothing in recent years?
So far he has committed about 1% of his net worth on Twitter. He is the biggest shareholder, and not shy to flaunt the fact, and make calls for changes to Twitter policy. He tweets and people respond. It must be nice.
M&A Due Diligence Management
A once-in-a-lifetime process for sellers
Confusing demands from buyers and funders
Let us manage the process and smooth the transition
Other Elon Musk and Twitter content
What is musk up to?
13 April 2022