Elon Musk is the new proprietor of Twitter, giving the Tesla billionaire management of one of many world’s strongest megaphones.
Late Thursday night, Musk tweeted: “The hen is freed.”
Multiple news outlets reported late Thursday that, after months of authorized wrangling and public acrimony, Musk had closed the $44 billion deal and fired prime executives together with the corporate’s CEO Parag Agrawal.
Twitter chairman Bret Taylor eliminated that title from his Twitter bio.
On Wednesday, Musk modified his Twitter bio to “Chief Twit” shortly earlier than strolling into Twitter’s San Francisco headquarters carrying a porcelain sink. “Let that sink in,” he tweeted.
With the deal accomplished, Twitter is as soon as once more a non-public firm. Its shares stopped buying and selling almost 9 years after it went public beneath the image TWTR on the New York Inventory Trade.
How a lot did Musk purchase Twitter for?
Musk agreed to purchase Twitter in April and take it personal earlier than making an attempt to get out of the deal, claiming Twitter misrepresented the variety of spam and pretend accounts on its platform, which Twitter denied.
Twitter sued Musk to finish the acquisition. Earlier this month, Musk supplied to purchase Twitter on the authentic value of $54.20 a share. A Delaware Courtroom of Chancery decide delayed the trial that had been set for Oct. 17 to present the 2 sides extra time to succeed in a deal.
Did Elon Musk overpay for Twitter?
Musk has acknowledged he overpaid for Twitter.
“The $44 billion price ticket for Twitter will go down as probably the most overpaid tech acquisitions within the historical past of M&A offers on the Avenue in our opinion,” Wedbush Securities analyst Daniel Ives wrote in a analysis be aware Thursday. He put the worth of Twitter at nearer to $25 billion.
“Though clearly myself and different traders are overpaying for Twitter proper now,” Musk not too long ago stated, “the long-term potential for Twitter is an order of magnitude greater than its present worth.”
Why did Musk purchase Twitter?
On a Tesla earnings name earlier this month, Musk stated he was “excited in regards to the Twitter state of affairs.” He described Twitter as a platform with “unimaginable potential” that had “languished for a very long time.”
Musk has predicted he’ll double income in three years, although he has supplied few specifics on how he would try this. He has stated he want to get away from Twitter’s heavy reliance on promoting.
In accordance with Musk, Twitter may assist speed up his plans for X, “the every part app” that, like China’s WeChat, he envisions will mix messaging, video, funds and commerce.
For now, Twitter faces a shaky future.
The Musk deal will saddle Twitter with an estimated $13 billion of debt. Analysts say Twitter could should make annual curiosity funds of greater than $1 billion.
Morgan Stanley and Financial institution of America have been among the many banks that supplied debt financing for the Musk takeover. Fairness traders included Saudi Prince Alwaleed bin Talal, Marc Andreessen and Oracle founder Larry Ellison.
Twitter faces slowing economic system, advert gross sales
Musk clinched the Twitter deal because the lengthy struggling firm ran headlong right into a enterprise whipsaw: a struggling economic system slowing demand for digital promoting.
Alphabet stated Tuesday that quarterly Google advert gross sales decelerated dramatically, making a drag on earnings. Fb mother or father firm Meta reported an identical drop in advert gross sales on Wednesday.
Twitter, which depends on promoting for 90% of its income, has pushed to search out different sources of income similar to subscriptions. However these merchandise like Twitter Blue haven’t gained a lot traction.
The deal comes at a time when Twitter is struggling to keep its most active users engaged, in accordance with inside Twitter analysis seen by Reuters. Heavy tweeters have been in decline for the reason that begin of the pandemic, a Twitter researcher wrote in a paper: “The place did the Tweeters Go?”
Twitter braces for deep cuts beneath Musk
Twitter’s earlier administration already planned to slash payroll by about $800 million and make deep cuts to infrastructure together with knowledge facilities by the tip of 2023.
Experiences of extra austere measures beneath Musk – together with shedding 75% of the corporate’s 7,500 staff – circulated earlier than the deal closed.
Fellow entrepreneur Jason Calacanis steered chopping the variety of Twitter staff to some 3,000, in accordance with messages he and Musk exchanged.
A dramatic workforce discount may undercut Twitter’s means to curb dangerous content material and safeguard customers’ knowledge.
“The straightforward half for Musk was shopping for Twitter,” Ives stated. “The Herculean activity can be fixing it within the years to return.”