Well, I can’t exactly say we all know and love Twitter, considering that only about one in five Americans are on it. Even among those who are on Twitter, I suppose a lot are like me and technically have an account but only go on there every six months.
So, it might be more accurate to describe Twitter as the social media platform we are all vaguely aware of and find somewhat off-putting. Twitter’s not unimportant, although even among hardcore Twitter addicts it would be hard to describe the platform as “beloved.” Twitter did have an outsized role in helping the last president launch a coup attempt against the U.S. government, and the weird mobbing behavior it seems more apt to inspire than the other social media platforms sure does lead to a lot of dumb controversies.
All that makes Twitter an unappealing possession, if you ask me. Of course, no one who could acquire Twitter would be asking me. But here are some unsolicited thoughts on it anyway.
For a lot of reasons, I wouldn’t personally invest in Twitter shares if I could help it (I’m sure I have some skin in Twitter nonetheless though index funds). One of the big ones, however, has recently been underscored in the ensuing drama of Elon Musk’s potential acquisition of Twitter.
The public found out in early April that Elon Musk had acquired 9% of Twitter’s outstanding shares. Shortly thereafter, Musk offered to buy the rest, at $54.20 per share, for a total of about $43 billion.
Twitter’s board was not thrilled about this offer. In fact, they went so far as to adopt a so-called “poison pill” shareholder rights plan on April 15 to make it harder for Musk to buy the company.
$54.20 per share represented a fairly generous premium over Twitter’s stock price at the beginning of April. The Twitter stock price was $39.31 at the close of trading on April 1. Twitter stock had a good April, in part on news of this potential deal, and the Twitter board did a 180 on Musk’s acquisition pretty quickly. By the end of April, it seemed that the parties were in agreement on the acquisition.
However, within two weeks, Musk was expressing serious reservations about the deal. On May 12, two top executives left Twitter, and the company announced a hiring freeze pending completion of the acquisition. That day, the closing Twitter share price was $45.08. The following day, May 13, Musk announced (on Twitter) that the deal was “temporarily on hold” due to his concerns about the number of spam accounts and bots on the platform. Twitter shares fell, and have barely made it over $40 per share since.
As we all know now, Musk officially moved to terminate the deal on July 8, again citing his concern about bots and spam along with Twitter’s apparent noncooperation in providing sufficient information on the issue. On July 12, Twitter filed a lawsuit seeking to force him to go through with the acquisition.
It took less than three months for Twitter’s leadership to go from taking grave measures to keep Musk from acquiring the company to suing him to try to force him to acquire the company. Not exactly a great indicator of long-term thinking.
On the other side of the coin, no one would accuse Musk of really carefully thinking this deal through in advance either. But Musk is not a publicly traded company with shareholders who depend on a board to make good decisions for them. He’s just a rich guy who is generally good at management and who has a lot of excellent ideas that he occasionally likes to pepper with a real train wreck of an idea.
No one can fault Twitter’s leadership for taking a proposal to acquire the company at $54.20 per share seriously. But at this point it almost seems like they just want the deal to close so they no longer have to run Twitter. If I were a Twitter investor, I’d rather have corporate leaders focus on sticking more ads in front of the 20-some percent of Americans arguing about various nonsense on their platform than waste more time on the upcoming trial against Elon Musk in October.
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