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Writer's pictureAI Growth Technologies
Nov 3, 20225 min read

Twitter: Elon Musk's Brilliant Move Hits Two Birds With One Stone


Elon Musk's recent purchase of Twitter sends the company in a new direction tweeting shortly after the deal was completed "the bird is free."


Closed for a mere $44 billion dollars, Elon Musk purchased Twitter in a deal that concluded on April 27th, 2022 at $54.20 per share. This highly controversial deal has been all over the news in recent months due to the eccentric billionaire's concerns regarding the alleged amount of fake users on the social media platform. Now in his first week at the helm, the new owner has already taken several measures to implement his new vision.


You might be asking yourself what does this vision entail? Well, a full makeover of what makes a Twitter tweet, starting with firing top Twitter executives including now Ex-CEO Parag Agrawal, and then sacking the entire board of directors according to filings to the Securities Exchange Commission (SEC) on Monday, Oct 31, 2022. It seems safe to say there is a new sheriff in town. To make matters more interesting, he decided one director was enough, himself as the sole director.


Now, that the New York Stock Exchange has begun the process to delist Twitter, its shares will no longer be able to trade on the open market as of the morning hours of Tuesday, November 08, 2022, according to the filing by the SEC. The filing also announced the merger of Twitter and Musk's wholly owned subsidiary X Holdings II, Inc which is an owned subsidiary by X Holdings I, Inc.


"The merger between Twitter, Inc. and X Holdings II, Inc., a wholly owned subsidiary of X Holdings I, Inc., wholly owned by Elon R. Musk became effective on October 27, 2022. Each share of Twitter, Inc. Common Stock was exchanged for USD 54.20 in cash, without interest and less any applicable withholding taxes."

- SEC filing on Oct 28th, 2022

So you might be asking yourself can you quickly buy Twitter stocks before the 8th?


The answer is no, purchases of the stock can no longer be made, as all trading of shares on the NYSE was suspended. If you did own Twitter stock at the time of the acquisition, then you will be paid $54.20 per share.


Where is Twitter Going From Here?

Rumors have swirled that the new management is planning to fire roughly 3,700 employees, which is about half of the entire workforce which would be a significant cost-cutting measure. This number can potentially change as the details are hammered out. Regardless, anxieties are running high in the San Fransisco headquarters. For the workers who will be keeping their jobs, things are expected to change quite drastically such as the reversal of the flexible work-from-home policies instituted during the outbreak of the pandemic. Changes are not only expected from within but also for Twitter users.

One of the major issues that held up the decision-making process to purchase Twitter was spam or fake accounts. Now that Elon is in charge, another major dilemma that needed to be resolved was monetizing the platform. In one fell swoop, Musk has seemed to find the solution to both issues.


After some public debate and polls on Twitter, it was determined that users can now pay for a blue checkmark that validates the authenticity of the user behind the account. Previously only available to the elites of society including celebrities, politicians, or journalists this coveted checkmark can now be purchased for $8 per month. Verified users will get special benefits such as seeing half as many advertisements, and priority in searches. Below is a screenshot from Elon Musk's own Twitter page making fun of the old system previously embarked on by the old Twitter establishment. Famous people will be given a new badge ti signify their importance, similar to how politicians' accounts are currently.



Hitting two birds with one stone (no pun intended 😉), Elon has seemed to address both Twitter's revenue stream problem and reduce the potential fraudulent accounts. Problem-solving should come as no surprise for the man who co-founded PayPal (PYPL), which recently was recognized by our AI algorithmic system, made electric cars cool with Tesla (TSLA), and somehow made space travel a private enterprise with SpaceX. Let's not forget about the Boring Company, which hopefully can solve the ever-present issue of traffic jams clogging our cities.


Challenges Remain Aloft

Twitter has not generated a profit in years so Elon's work remains cut out for him. The company's main revenue stream remains to be advertising currently producing 90% of its $5 billion annual revenue and all the recent commotion and changes have caused some major companies to suspend their paid advertising on Twitter. According to the New York Times, one of the largest advertising companies in the world, IPG has recommended that it clients pause advertising on Twitter until the new direction of the company can be established.


It has been reported that companies like General Motors (GM) and L’Oréal (OR) have decided to suspend their ad budgets.



In response, Musk tweeted whether "Advertisers should support: Freedom of Speech or Political Correctness." He also told major advertisers he plans to keep content moderation and update how it's done by setting tiers of content moderation, apparently like the film rating system. Musk has never been afraid to ruffle feathers (not another pun 🤦). Addressing the issue of fake accounts generating an additional revenue stream to diversify Twitter's reliance on its advertising-focused revenue stream was a smart move. The man's stellar record for achieving the seemingly unachievable makes us believe that at the end of the day, it will be Elon that will have the last laugh. Perhaps a tweet from the planet Mars is on the horizon. Too bad we cannot buy Twitter shares anymore. Love him or hate him, everyone is interested in what he will do next.


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Sources:

1. @elonmusk, Elon Musk, "the bird is free." (2022)

4. Sec.gov, Archives (2022)


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