Elon Musk is taking control of Twitter. Here’s how ‘the bird has been freed’.

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By Beansprout • 28 Oct 2022 • 0 min read

As the 'Chief Twit', Elon Musk has assured advertisers that Twitter will remain a platform where healthy debate can take place.

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What happened?

Elon Musk, the world’s richest man, is taking charge of Twitter. 

In a tweet (obviously), he shared that “the bird is freed”. This was read by investors to mean that Musk’s takeover of Twitter has been completed. 

This follows many twists and turns since Elon Musk first made his US$44 billion bid for Twitter in April. 

By completing the acquisition, Musk would have effectively avoided a long-drawn legal battle for the deal.

Here are some of the other ways in which Musk’s ownership of Twitter would shake up the company.  

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Source: Twitter

What does this mean for Twitter?

#1 – Elon Musk is ‘Chief Twit’ as Parag Agrawal is fired

Elon Musk is now in charge of Twitter, according to reports by CNBC.

At the same time, Twitter’s previous CEO Parag Agrawal  and finance chief Ned Segal were reported to have left the company’s headquarters and will not be returning. 

Earlier this week, Musk had arrived at Twitter headquarters carrying a sink. He documented the event on Twitter by saying “Entering Twitter HQ – let that sink in!”

Musk also updated his description on Twitter to “Chief Twit”

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Source: Twitter

#2 – Some potential job cuts 

In a town hall with Twitter employees, Musk had shared that he does not intend to cut 75% of staff when he takes over the company. 

Just last week, it was reported that there were significant layoff plans once he took control of the firm. 

According to the report, Musk had told potential investors that he plans to leave the company with a skeleton crew, down from its current employee base of 7,500 workers. 

However, some observers are still expecting Musk to cut some staff as part of the takeover, though the number is probably not known to many part from the “Chief Twit” himself. 

#3 – Not a “free-for-all hellscape” 

Musk had also tried to assure advertisers that Twitter will remain a platform where healthy debate can take place.

“The reason I acquired Twitter is because it is important to the future of civilization to have a common digital town square, where a wide range of beliefs can be debated in a healthy manner, without resorting to violence.” said Musk.

Earlier, the Wall Street Journal had reported that advertisers have expressed concerns about Musk’s much-speculated plans to reduce content moderation. 

In fact, some advertisers were afraid that he would take away advertising from the platform altogether! 

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Source: Twitter

What would Beansprout do?

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Source: Google

 

Twitter is one of the very few tech companies that has seen its share price go up so far this year. 

This may not mean that everything's looking rosy for the company. 

It has yet to report its third quarter results, but we have seen disappointing earnings reported by companies such as Snap, Google’s parent Alphabet, and Facebook’s parent Meta which are dependent on advertising revenue. 

This comes as companies cut back on advertising spending with an uncertain economy. 

At the same time, Musk’s acquisition of Twitter did not come cheap. 

Based on the purchase price of US$44 billion, the deal would value Twitter at a forward multiple of 7.4x price-to-sales and 34 times price-to-adjusted EBITDA, according to consensus estimates. 

This is significantly above the valuation multiple of other social media companies. For example, Meta is trading at a price-to-sale multiple of 2.1x, after its 25% plunge on 27th October. 

Apart from watching this unfolding drama, we’d await more details about Musk’s plans to grow Twitter’s user base and win over advertisers.

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