The way Elon Musk acquired Twitter seems more fiction than a natural occurrence on Wall Street. When he first tried to buy Twitter in April, Twitter’s board responded with hostility and even threatened to employ the poison pill strategy to discourage his attempts by diluting their shares. In this article, we’ll dive into this abnormal takeover and his future plans for the company.
As mentioned above, Elon Musk first took interest in April, when he attempted to buy Twitter. Twitter’s board responded negatively and tried to stop his attempt at acquiring Twitter. Having no other option, he settled by buying some shares and obtaining a 9.1% ownership in the company and everyone thought “well that’s the end of that”. They couldn’t have been more wrong.
Fast-forward 6 months, a minor lawsuit against Mr. Musk by the board and a $52.4/share payment later, today Elon Musk is the proud owner and CEO of the $44 Billion company. On top of that, he has taken Twitter private which means you can no longer purchase a stock of Twitter. Of course, no one knows for sure if Elon Musk plans to keep the company private or if will he relist the company again in the future, which is definitely possible.
So What Has Happened Since Then?
After taking over Twitter, Elon Musk has undertaken a ton of controversial decisions and actions. Let’s take a quick look at some of the key changes he’s made since acquiring the company.
1. Firing of executives and sudden layoffs
There can only be one CEO and when a company goes private, I guess the board of directors becomes extra baggage, which is why Elon Musk fired all of these executives. Another possible reason could be the fact that, without a board of directors, Elon Musk can make independent decisions on behalf of the company, thus gaining full control over Twitter. Other than the board of directors, Elon Musk also laid off approximately half the entire workforce of Twitter (3,700 employees) within just 2 weeks of acquiring the company.
After firing half of Twitter’s workforce, Elon Musk sent out a harsh email to all the remaining employees in Twitter as seen above. From various online sources, it appears that 75% of the remaining workforce has also opted to leave after receiving the email, now leaving Twitter with approximately 925 employees left.
According to Elon Musk, as the company was losing $4 Million a day there was no other option. Although this may be true, the way he offloaded the employees in a sudden and hasty manner, revoking their access to their work laptops and accounts in the middle of the night, sparked some outrage among twitteratis, and rightly so.
2. $8 monthly fee to have a verified badge.
Considering the current negative cash flow of Twitter, applying an $8 monthly fee to keep a verified badge may have been a necessary decision. Just for some prior context, the verified badge was used to identify authentic accounts owned by people of public interest such as celebrities and politicians. So what’s changed? The new change has now allowed anyone to have a verified badge with a low low cost of just $8/month. As this feature allows anyone with $8 to spare to have a verified badge, troublemakers made good use of this opportunity and a mania of parody accounts ensued.
Twitteratis created tons of fake accounts pretending to be famous individuals, and while some were funny, some went too far, and a small little prank resulted in a pharmaceutical company losing millions of dollars in market cap.
3. Allowing previously banned users back on the platform
Another controversial move by Elon was announcing that Donald Trump would be allowed back on the platform if he were to acquire it. He made the announcement back in May and although Donald Trump congratulated Elon on his acquisition, it seems Trump isn’t interested in getting back on Twitter. Be as it may, the offer alone offended a bulk of democrats and Elon has been trying to deflate the situation by posting neutral tweets.
Elon Musk is an eccentric man, to say the least and so is Twitter’s future under his leadership. The past couple of weeks have been a testing phase by Musk as he himself tweeted “Please note that Twitter will do lots of dumb things in coming months. We will keep what works and change what doesn’t”.
Despite all the mania and backlash twitter has been facing, after Musk’s takeover, the company just hit an ‘all-time high of active users’ last Friday. Furthermore, he also announced that fake accounts will now have the word “parody” under them so users cannot engage in impersonation, and accounts indulged in such activities shall be permanently suspended. But the question remains, is private ownership of a public platform a good idea? Only time will tell but one thing is for certain, it will be an interesting ride.
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