There is an irritating predictability to the way in which Elon Musk’s unsolicited bid for Twitter is unravelling. Some users might have been excited by the idea but tech commentators and investors in Twitter were sceptical from the start. Why wouldn’t they be? For the second time, Musk appeared to insert a 420 internet weed joke into a multibillion-dollar deal announcement. Since the deal was agreed, Twitter’s share price has remained stubbornly below Musk’s $54.20 a share offer.
Much of this scepticism can be traced to the fact that Musk is one of the highest profile examples of someone with wildly different online and offline personalities. The first time I listened to him speak on a Tesla investor call, I was struck by how soft and halting his voice could be. Watch his interview at the FT’s Future of the Car summit in May and you’ll see what I mean. He comes across as serious and good natured. Every question, no matter how provocative, is answered thoughtfully and carefully. It’s not hard to believe that this is an entrepreneur who could simultaneously secure contracts with Nasa, bend the global car industry to his will and line up financing for a huge social media deal.
On the internet, however, he can be rude and combative. He has a weakness for memes, particularly ones that include flattering photos of himself. Despite a deal imposed by regulators that is supposed to monitor his tweeting habits, the jabs keep coming. A lewd joke about the US Securities and Exchange Commission in 2020. A Chuck Norris meme poking fun at the Twitter deal disintegrating this month. Perhaps, mused Margins newsletter author Ranjan Roy, the Twitter buyout was simply “shitpost performance art” — just a way to provoke a reaction.
Twitter’s problem is that it is fighting Musk’s online persona. Although it has cost him a multimillion-dollar fine and the role of chair at Tesla, unpredictability is also his strength.
Musk’s argument that he wants to exit the deal because Twitter misrepresented the true number of spam or fake accounts on its platform is unconvincing. Twitter has always admitted that these calculations are difficult. Few are predicting that Musk will win. But one of the questions being asked by commentators such as Bloomberg’s Matt Levine is what might happen if he loses the case and refuses to comply. How would Delaware’s chancery court wrestle funds from a wayward billionaire?
Knowing this will probably influence Twitter’s decision-making. The San Francisco company is suing Musk to force the $44bn deal to go ahead. But investors, employees and the board might accept a smaller payout to settle the case and be rid of his attentions.
To his online fans, impudence is part of Musk’s appeal. When he declared he wanted to buy Twitter, he was not only a tech entrepreneur and the richest man in the world but an internet celebrity.
The problem, as every social media influencer knows, is that attention does not always translate to financial success. Between the deal’s announcement and his attempt to terminate it, Musk’s online fame has flourished. He is now the sixth most followed Twitter account in the world with more than 100mn followers. But in the same time period, his wealth, largely tied up in Tesla shares, fell by more than $30bn, according to the Bloomberg Billionaires Index.
This reversal of fortune tracks the deal itself, which generated intense global interest but never made much financial sense. Twitter might have cachet among business leaders, pop stars and politicians but it struggles to extract profit from users. Those users are notorious complainers too. One side moans that not enough is done to censor abusive messages. The other shouts that its right to free speech is threatened. No wonder co-founder and former chief executive Jack Dorsey had to take himself off to a silent retreat.
Musk always presented his interests as non-financial. “This is not a way to make money. It’s just that my strong, intuitive sense is that having a public platform that is maximally trusted and broadly inclusive is extremely important to the future of civilisation,” he said after the deal was announced.
But it’s hard not to care about money when you suddenly have much less of it. Twitter claims that Musk started acting against the deal when the market turned. The Tesla shares Musk planned to use have lost more than a fifth of their value. A broad tech stock sell-off plus uncertainty over the deal have helped lop almost $5bn from Twitter’s valuation. If he still has over 9 per cent of the stock, that means Musk’s investment in the company has dropped in value by around $450mn.
Stuck in limbo, Twitter is trying to roll out new features. The app now chirps when you refresh the feed. But it needs to focus on offering products that can ameliorate a digital advertising slump, not fighting with a would-be buyer. Revenue in the second quarter fell 1 per cent compared with the previous year. Judge Kathaleen McCormick agrees that a swift conclusion is needed. If the Delaware court remains unswayed by Musk’s online high jinks, it will be at least one point in Twitter’s favour.