The problem that Twitter’s management will face in mounting a case that Twitter is worth more, if it is run differently, is that they have been the custodians of the company for the last decade, and have been unable or unwilling to deliver these changes. Shareholders in Twitter will welcome management’s willingness to consider alternative business models, but the timing makes it feel more like a deathbed conversion rather than a well thought through plan. Elon Musk’s problem, on the Twitter deal, is a different one. If you think Jack Dorsey was stretching the limits of his time by running two companies, I am not sure how to characterize what Musk will be doing, if he acquires Twitter, since he does have a trillion dollar company to run, in Tesla, not to mention SpaceX, the Boring company and a host of other ventures. In addition, Musk’s unpredictability makes it difficult to judge what his end game is, at least with Twitter, since he could do anything from selling his position tomorrow to bulldozing his way through a poison pill, taking Twitter down with him. I know that there are question of how Musk finance the deal and whether he can secure funding, but of all of the impediments to this takeover, those might be the easiest to overcome. The fact that Twitter’s stock price has stayed stubbornly below Musk’s offering price suggests that investors have their doubts about Musk’s true intentions, and whether this deal will go through.
Aswath Damodaran
A valid point that I have thought about multiple times: people loved to criticize Jack Dorsey for being a part-time CEO, but nobody complained about Musk running God-knows how many companies and projects simultaneously. If I were to speculate, it was probably because Musk is viewed as highly involved in everything, a workaholic micromanager with no personal life, and Americans love to adulate such role models, despite promoting an unhealthy lifestyle. I for one do not envy the pressure Twitter employees will find themselves in should this deal go through.
In the mere four days since this analysis was published, a lot has changed yet again. I would have agreed with the author that this acquisition bid’s most likely result would be Twitter staying independent with significant corporate governance changes, but Elon Musk has apparently secured the $46.5 billion in financing for the bid – although the proposed deal structure would dry up most of his available liquidity – and recent news reports that Twitter’s board is considering accepting as early as today… (Considering how he and Jack Dorsey seem pretty close, I wouldn’t be terribly surprised if Dorsey would return as CEO under this new ownership – though I doubt Jack would want Elon breathing down his neck all the time.)
In this discussion, I have deliberately stayed away from the elephant in the room, which is that this is, at its core, a political story, not a financial one. To see why, consider a simple test. If you tell me which side of the political divide you fall on, I am fairly certain that I will be able to guess whether you favor or oppose Musk’s takeover bid. As with most things political, you will provide an alternate, more reasoned, argument for why you are for or opposed, but you are deluding yourself, and hypocrisy is rampant on both sides.
- If you are opposed to the deal, and your argument is that billionaires should not control social media platforms, that outrage cannot be selective, and you should be just as upset about Jeff Bezos owning the Washington Post or a George Soros bid for Fox News. If it is Musk’s personality that you feel is what makes him an unsuitable owner, I wonder whether we should be requiring full personality tests of the owners of other media companies.
- If you are for the deal, and it is because you want Twitter to be a bastion of free speech, it is worth remembering that every social media platform is involved in some degree of censoring, for legal reasons and self preservation. It should also be noted that while those disaffected with Twitter have attempted to build their own social media platforms, they still get far more mileage from their presence on Twitter than from their posts on alternate platforms, and the complaints about Twitter not being balanced seem to end up being on Twitter.
I have no issue with Musk’s personality, my issue is with his character. Just as Trump has never encountered a situation that he couldn’t cheat and lie his way out of, Musk was never in a position where he couldn’t buy himself out of – or bang his head stubbornly against a wall. He seems thoroughly incapable of admitting mistakes, apologizing, or accepting advice and valid criticism, at least in public – not the type of person you would want making the nuanced decisions needed to moderate public conversations.
BREAKING: World's biggest clown purchases world's largest circus
— Reuters Pitchbot (Satire) (@ReutersPitchbot) April 25, 2022
For all the fretting about Jeff Bezos buying The Washington Post, there hasn’t been any major indication that he intervened in their editorial decisions so far. With Musk acquiring Twitter, the opposite will likely happen: Musk will change the moderation rules to fit his personal vision of free speech – and to derive the most entertainment and ego-stroking from the app as possible. That may appeal to his legions of sycophants but suppressing information contrary to his views will ultimately erode Twitter’s value. Think of the wealth of information about the pandemic shared by medical experts from all over the world; would that have happened under Musk’s leadership, when he proclaimed early that the pandemic will be over in weeks and then forced his employees back to work in unsafe conditions?
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