At 7:23 a.m. on Thursday, Elon Musk tweeted. One line, no punctuation. It read: “I made an offer” and there was a link to the securities filing where Musk proposed buying Twitter—for $43 billion—and taking it private.
Several hours after he announced that he was trying to take over Twitter, Musk told an interviewer during a TED Talk that he was unsure about whether he could pull this off, but that he wanted to try, because he sees Twitter as a kind of public square. “It’s important to the function of democracy,” he said. But, considering Musk’s penchant for causing mischief, many are skeptical of his intentions. Is this really a genuine bid to mold Twitter in his image, or does he just want to have a little fun, make some money, and walk away?
On Friday’s episode of What Next: TBD, I spoke with Felix Salmon, host of Slate Money and chief financial correspondent at Axios, about what Elon Musk really wants with Twitter. Our conversation has been edited and condensed for clarity.
Lizzie O’Leary: You said something very prescient last week, which was “Everyone knows that if Elon wants 9.2 percent of Twitter, what he really wants is 100 percent of Twitter.” Congrats on being right.
Felix Salmon: Honestly, I wasn’t convinced he was going to make a bid for the whole thing. I know that it sounds prescient, but there’s a difference between wanting 100% of Twitter and actually trying to put funding together to spend $43 billion on Twitter, which, even if you’re Elon Musk, is a nontrivial amount of money.
How did we get from last week to here?
First, Elon buys a large chunk of Twitter stock and makes an SEC filing, saying he has no strategic goals whatsoever, he’s just a passive investor. Shortly thereafter, he changes his mind, saying, “Well, there is a strategic goal, and actually I’d like to join the board.” Jack Dorsey, the co-founder, says, “I’ve been trying to get him on the board for ages.” Parag Agrawal, the CEO, says “It’s going to be great having Elon on the board.” But then, literally the day he was meant to join the board, he sends them a letter saying “Never mind, I don’t want to join the board after all.” I think he persuaded himself that being on the board would not be enough, and what he really needed to do was own the company. He said “Nope,” because according to the board agreement, he couldn’t make a bid if he was on the board.
Why does Elon Musk want to buy Twitter?
Am I allowed to say billionaire whimsy? When you’re a billionaire the world doesn’t work the same way that it does with everyone else. He has $200 and some billion. Why not? It’s a toy. He gets to play with it.
In his securities filings, he writes, “I invested in Twitter as I believe in its potential to be the platform for free speech around the globe. And I believe free speech is a societal imperative for a functioning democracy. However, since making my investment, I now realize the company will neither thrive nor serve this societal imperative in its current form. Twitter needs to be transformed as a private company.” Do you do you believe this statement about free speech?
I believe that he believes it. I don’t think he’s being disingenuous here. He sees the way that Twitter has been approaching abuse on the platform, the way that it’s beefing up moderation, and the way that it’s happier to suspend people and ban people as all being bad things. He knows that there were a lot of calls for him, Elon Musk, to be banned a few years ago. I was one of the people who was who were making those calls, back when he was harassing a bunch of journalists, calling people pedophiles, that kind of thing. He would love to see a much more laissez-faire Twitter. And he thinks, and I think he might even be right in thinking this, that there’s no way we’re going to get a much more laissez-faire Twitter so long as it’s a public company with a broadly diverse board.
Musk outlined his vision of Twitter in broad strokes in his TED interview on Thursday: “My strong, intuitive sense is that having a public platform that is maximally trusted and broadly inclusive is extremely important to the future of civilization.” He got a pretty sympathetic reception from the TED audience and from certain sections of the internet. Looking at the reaction from people on the right—Meghan Kelly, Nigel Farage, Dinesh D’Souza—what do you think they see in Elon Musk? What he has said about Twitter that’s making them so happy?
The big thing that they see is if this is a freedom of speech network where anyone can say anything, then the first thing he does is he allows Trump back. And they know that Trump is looking to be the Republican nominee and that he gets a huge amount of benefit from Twitter, and if Trump is allowed back on Twitter, then that’s going to help their electoral chances in 2024.
Does being a private company change that at all? Does it make it more likely that he could do whatever he wants in that way?
It’s, I think, the only way that he can do whatever he wants in that way. Owning 9.2 percent of Twitter certainly does not give him the ability to bring Trump back. Owning 100 percent of Twitter certainly does.
Let’s go through the steps that it would take. He has made this offering to buy these outstanding shares. What happens?
So now it’s up to the board. The board has received an offer with extremely vague funding contingencies. Elon is basically saying, “I’m offering this, but only if I can get a mortgage.” He’s not being at all clear where he expects to find this money, so it could all fall apart. At that point, the board is going to want to see a credible financing package lined up. But assuming that he has a credible financing package lined up, which is a big assumption, then the board is going to say, “Do we think that $54.20 per share is a good price for the company?” If they say yes, then basically that’s the deal done. Elon Musk raises the cash, and then everyone who has Twitter shares wakes up the following morning with no Twitter shares and with $54.20 per share in cash instead.
What happens to regular old users if that if that’s the case? Do you think people turn away? Do they care?
People care, but it’s far from clear where they’re going to turn to. I mean, they’re not going to go Truth Social. One of the reasons why Twitter has lasted as long as it has is because it’s Twitter. There’s no other alternative to it.
Even though it’s a small company? It’s nowhere near the size of Facebook.
Well, it’s a huge company. It’s worth, according to Elon Musk, $43 billion. It has hundreds of millions of users around the world and it punches above its weight in terms of public impact. The only way in which Twitter is a small company is if you’re comparing it to Facebook.
I guess it’s the punching-above-its-weight part that I’m getting at, because you’re right: There is no other option.
Yeah, trying to sort of orchestrate a mass exodus from Twitter would be practically impossible. But if Elon owns Twitter, he can—if he gets pissed off at a journalist—just ban that journalist. If he wanted his own tweets to be in a bigger font, if he wanted everyone on Twitter to automatically be following Elon, he could do that.
Mark Cuban posited an interesting theory, which of course he posted on Twitter, that if Elon sells, then some other company like Facebook or Google would step in and try to buy Twitter. That certainly seems like something the board might be more likely to go for. They do have a fiduciary duty here, vis a vis the Elon offer. What do you think?
I think there is zero chance that Google or Facebook or any large tech company would ever be able to buy Twitter.. Given the Biden administration’s antitrust stance and the general anti-tech opinions in Washington, no one is going to even try that one. It would obviously be a monopolistic, anti-competitive move and there’s just no way.
You were right last week that Elon Musk wanted to buy Twitter. Can you do some more predicting? What do you think happens next?
The first thing that happens is that the Twitter board rejects the offer. They say that it doesn’t fully value Twitter, that, you know, à la J.P. Morgan, there is more upside from something, something, product, something. Then the ball is back in Elon’s court. He can stick around with his 9.2 percent, he can sell his 9.2 percent, or he can raise his ostensibly best and final bid and try and sweeten it somehow. My guess is that probably he dumps his stock, makes $800 million profit on buying low and selling high, and walks away.
Let’s say this whole thing falls apart and he does walk away. What’s the upside for Elon there?
Many hundreds of millions of dollars is the upside, assuming that he can sell roughly at the price that Twitter is trading at right now, which is a generous assumption. Maybe he can’t. But realistically, he is going to be able to sell his stake at a price significantly higher than he bought it for. And so that’s a nice short term capital gain for him.
Is this all some elaborate pump-and-dump?
I mean, maybe it is, you know, he can do it with Dogecoin, why not do it with Twitter?
J.P. Morgan seems to agree with you. They said that the shares have significantly greater upside if management is able to execute on its plan to innovate on product, grow the userbase 20 percent, and build out direct response advertising. They don’t they don’t think this is going to be accepted by the board, and yet here we are talking about it. This is the thing about Elon Musk. It’s really hard to tell if he is making serious corporate offers or doing billionaire whimsy.
When you’re Elon I don’t think there’s a difference. You kind of don’t know whether he’s a superhero or supervillain. One minute he’s Iron Man, and next minute he’s the Green Goblin. He literally put out a tweet saying he was in goblin mode. And I think we can take that at face value. What that means, we don’t really know. But he’s causing mischief and he loves doing that.
That seems not great. Is it healthy for one man to have so much influence over the market and the way we think about these great big companies?
It’s deeply, deeply unhealthy. Right now, the most powerful billionaire in the world is probably Mark Zuckerberg. But if Elon were to buy Twitter and had control of a social network that is basically responsible for having elected Trump the last time around, and if on top of that, he also continues to control Tesla and SpaceX, then he would be giving Zuckerberg a run for his money. And he is much more prone to flexing his muscles than Zuckerberg is. He likes going out on Twitter and just saying, “Hey, guess what? I have all this power. I can troll people. I can do things like make $43 billion offers for Twitter because I’m bored this morning.” It does seem wrong that there’s no checks and balances there. There’s no accountability there. He can just do whatever he likes.