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3 reasons why Elon Musk is buying Twitter

Published by: Lucien Paulemil
May 21, 2022 6:31 am

It’s official: Elon Musk, the world’s richest man, has officially purchased Twitter for an estimated $44 billion. Twitter’s board has accepted his offer of paying shareholders $54.20 cash for each share they hold. 

The deal will enable Musk to take Twitter private and, according to him, “unlock the value” of one of the world’s leading social media platforms. 

Here are 3 reasons why is Elon Musk is buying Twitter.

Deliver shareholder value

Two weeks ago, Elon Musk tabled a first bid to buy Twitter. 

In his proposal, he vowed to “unlock” Twitter’s potential by cracking down on the firm’s controversial censoring policies. In his view, Twitter’s unfair restrictions on free speech have alienated large portions of the user base, which in turn affects the company’s stock price performance. 

 Twitter’s stock has underperformed fellow tech stocks since its 2013 IPO.

Indeed, Twitter stock is only up 24% since it went public in 2013, which is a dismal performance for a high-growth tech company. 

Will Twitter’s profitability improve once Musk implements his vision?

If the stock price’s recent surge is a sign of things to come – the share price soared 32%s since Musk first revealed he purchased 9% of the company two weeks ago – Musk could be looking at significant ROI.

It is beyond doubt that the “Musk effect” can send stock prices surging: Tesla’s 25,890% price appreciation since 2011 is testament to that fact. If Musk succeeds with his endeavour and decides to re-list the company on the public markets in the future, the firm’s valuation could skyrocket.

So, it is arguable that unlocking growth and profitability are the first major reasons why Elon Musk is buying Twitter.

Protect free speech

Elon Musk is a self-declared “free speech absolutist” who believes that “free speech is the bedrock of a functioning democracy”. If his recent actions are anything to go by, it appears he lives by this mantra. 

 Musk recently tweeted that he is a free speech absolutist

One month ago, he deployed Starlink satellites to provide internet connectivity to the people of war-torn Ukraine. He was immediately flooded with requests to cut off internet service to his clients in Russia – but he flatly refused, saying he believes everyone should have the opportunity to express themselves. 

Not only is Musk one of Twitter’s most influential users, but he has also described the platform as “the digital town square where matters vital to the future of humanity are debated”. Thus, his desire to purchase and improve the platform makes perfect sense.

Musk brazenly declared: “I hope that even my worst critics remain on Twitter because that is what free speech means”.

So, it is possible that Elon Musk’s belief that free speech is essential to democracy is the second reason why he is buying Twitter.

However, while convincing Twitter’s board to accept his offer was a relatively quick process, it certainly wasn’t an easy one. Further, his efforts to revolutionize the platform may prove just as difficult.

Enhance the product with new features

Not only has Elon Musk declared his commitment to protecting free speech, but he has also revealed ambitious plans to make Twitter an even better platform. This is the third reason why he is buying Twitter.

In fact, he has already identified three major improvements: 

  • Make the algorithms open source to increase trust.
  • Defeat the spambots that ruin the user experience.
  • Authenticate all human users.

These are ambitious projects, but if anyone can pull it off, it’s certainly Musk. He succeeded in disrupting the space exploration with SpaceX, internet service with Starlink and the automobile industry with Tesla, so implementing new features on a social media network should be an easy feat in comparison. 

That said, he may face internal resistance from parts of Twitter’s workforce, who fear that his vision will lead to the spread of misinformation and illegal content on the platform.

Should you buy Twitter stock?

Elon Musk’s fans are certainly excited by this news. However, the bad news is that Twitter will be taken private, so the stock will eventually delist from the American exchanges. Thus, it will no longer be possible to invest in Twitter. The delisting is expected to occur later this year.

The information in this article is well-researched and factual. Still, it contains opinions also, and IT IS NOT FINANCIAL ADVICE and should not be interpreted as such, do not make any financial decisions based on the information in this article; we are not financial advisors. We are journalists. You should always consult with a professional before making any investment decisions.

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