Elon Musk Has Better Things To Do Than Buy Twitter
And going private won't make Twitter better.
A few weeks ago, Elon Musk purchased a 9 percent stake in Twitter. This investment cost him about $3 billion.
Now, Elon Musk is setting his sights a bit higher than 9 percent: He wants all of it. Musk has offered to buy Twitter at $54.20 per share, for a total of about $43 billion. If the sale takes place, his intention would be to take the company private.
Is The Future Of Law Distributed? Lessons From The Tech Adoption Curve
This sale probably won’t take place. For one thing, Twitter’s current board is not so keen on the company getting acquired.
The Twitter board has adopted a so-called poison pill shareholder rights plan, which would kick into action should any investor acquire more than 15 percent of Twitter’s shares. This plan would allow all other Twitter investors to buy one additional share for each share they own at a discount, while increasing the share price a hostile investor would have to pay to $420 (that price is presumably a dig at Musk’s multiyear tango with the SEC over his “$420 funding secured” tweet related to a potential bid to take Tesla private).
It doesn’t seem to make financial sense for Elon Musk to buy Twitter either. Musk’s offer at $54.20 per share represented a 54 percent premium over the Twitter stock price the day before he started investing in Twitter to acquire his current 9 percent ownership, and a 38 percent premium over the share price the day before his current Twitter investment was made public. Experts do not expect Musk to face competition from private equity firms in his attempt to buy Twitter, because the rates of return don’t work at Musk’s contemplated purchase price.
Still, an investment not making financial sense to others hasn’t stopped Elon Musk in the past. Nobody thought an electric car company would work (for like a century) until he turned around and built Tesla. He made strides in private spaceflight with SpaceX that seemed impossible at the dawn of the 21st century. He’s doing interesting things with The Boring Company and Neuralink, and even his early work in software and online banking was transformative at the time.
Sponsored
Early Adopters Of Legal AI Gaining Competitive Edge In Marketplace
Is The Future Of Law Distributed? Lessons From The Tech Adoption Curve
Navigating Financial Success by Avoiding Common Pitfalls and Maximizing Firm Performance
Legal AI: 3 Steps Law Firms Should Take Now
Musk acknowledges his attempt to buy Twitter is not about increasing his already substantial wealth. “This is not a way to sort of make money,” Musk said of his offer to buy Twitter at TED2022. “I don’t care about the economics at all.”
So, what does he care about? “I think 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,” said Musk.
And yeah, sure, broadly speaking I can see that. But that public platform is not Twitter, and Elon Musk owning Twitter won’t turn Twitter into such a platform.
Of course, like any lawyer I could tell you that your right to free speech has little to do with what a social media platform does or does not do, because the First Amendment only applies to the government. Whether Twitter is publicly or privately owned, it is not the government.
More importantly, nothing about Musk’s own experience should tell him that how Twitter is governed has anything to do with whatever free speech issues we might face as a nation. Yes, Musk got in trouble with the SEC over a series of tweets. But Twitter didn’t stop him from posting those tweets: It was the SEC who attempted to curb his speech after-the-fact. Elon Musk would have been better off if Twitter had stymied some of his more ill-advised speech.
Sponsored
The Business Case For AI At Your Law Firm
Legal AI: 3 Steps Law Firms Should Take Now
As for anything done by Twitter to curtail free speech more broadly, reality does not support the idea that this is or has been an actual problem. The most prominent example is that Donald Trump got to tweet anything and everything that popped into his pea-sized brain throughout the 2016 campaign and then during nearly his entire presidency — his speech, and for the most part that of his Looney Tunes followers, was nearly entirely unrestricted on Twitter.
I don’t think most of us remember that as some golden age of freedom and progress. It was only after the January 6 insurrection when Donald Trump was kicked off Twitter for inciting a mob of his supporters to violently storm the U.S. Capitol.
To be fair, we don’t know exactly what Elon Musk would do if he had control of Twitter, and the idea that it might be restore Donald Trump’s account is mostly based on Musk’s vague nods to free speech and the ever-present optimism of the remaining MAGA acolytes. Even so, it is very unclear what extant problem there is that could actually be solved by Elon Musk buying Twitter.
Everyone needs a hobby. Maybe putting out an offer to buy Twitter is just Elon Musk’s version. But I really hope he’s not intending to put a ton of his brainpower into fixing a problem that doesn’t really exist using the wrong tool for the job.
A technology set up to let people fire a few unvetted sentences out to the internet is never going to significantly better our society regardless of who’s in charge of it. Musk’s other endeavors are immeasurably more important than anything going on on Twitter.
Jonathan Wolf is a civil litigator and author of Your Debt-Free JD (affiliate link). He has taught legal writing, written for a wide variety of publications, and made it both his business and his pleasure to be financially and scientifically literate. Any views he expresses are probably pure gold, but are nonetheless solely his own and should not be attributed to any organization with which he is affiliated. He wouldn’t want to share the credit anyway. He can be reached at jon_wolf@hotmail.com.