Overnight, the Twitter saga reached a crescendo, with the confirmation that the Twitter Board has accepted Elon Musk’s bid for $54.20 per share.
Today, Twitter’s share price rose 5.65% before the market closed at a price of $51.70. Shares of the company have now been halted.
The deal is expected to close sometime this year, so while the bid has been successful, don’t expect the Edit button tomorrow. For the majority of users the platform will largely stay the same. There is likely to be a change in user policies, so expect to agree to new terms of service at some stage to accommodate for this.
Musk will make the Twitter algorithm open source. Twitter, like virtually all social media networks use algorithms to determine who sees which posts in their feed. Personally, I am following over 5,000 accounts and if I was shown every post, like and retweet from every one of those accounts, it’d be a disaster, so Twitter determines which I should see and this is evidenced in the Twitter activity card when you post, not 100% of your followers see the content posted.
By open-sourcing the algorithm, Musk hopes to bring a level of transparency to the way Twitter is running their service and allows people to raise questions about why things are programmed and weighted a certain way.
One of Musk’s key motivations for buying Twitter was to restore free speech on the platform, something he believes has been inhibited in recent times. This likely means we’re going to all need to develop thicker skins and not take offence when someone has an opinion different to ours. All platforms still need to police illegal activity, so we’ll see how well Twitter under Elon Musk can walk this difficult line.
Musk celebrated the major purchase, worth around US$44 Billion, posting this tweet to his 83.6M followers.
While many are concerned about Musk buying Twitter, as someone who has used the platform daily since Feb 2008, I’m excited to see where he takes it and I don’t expect you drop US$44B to make the service worse.
Twitter is currently very US-heavy and if we think about the global markets that Tesla ships vehicles into, many of these are likely candidates for user expansion.
Ahead of the deal being finalised, Musk said that board compensation would go to $0 and its moves like that should see more of the company’s finances focused on product improvement.
It is highly likely that we see most of the current executive team leave and be replaced by Musk-appointed personnel, while I’d expect a small number of employees to move on. Generally, the opportunities for engineers at Twitter to excel and accelerate their efforts just got a lot better and there should be optimism that this platform can be better than it is today.
CNBC has a full article on the acquisition which includes this full announcement from Twitter:
Twitter, Inc. (NYSE: TWTR) today announced that it has entered into a definitive agreement to be acquired by an entity wholly owned by Elon Musk, for $54.20 per share in cash in a transaction valued at approximately $44 billion. Upon completion of the transaction, Twitter will become a privately held company.
Under the terms of the agreement, Twitter stockholders will receive $54.20 in cash for each share of Twitter common stock that they own upon closing of the proposed transaction. The purchase price represents a 38% premium to Twitter’s closing stock price on April 1, 2022, which was the last trading day before Mr. Musk disclosed his approximately 9% stake in Twitter.
The Twitter Board conducted a thoughtful and comprehensive process to assess Elon’s proposal with a deliberate focus on value, certainty, and financing. The proposed transaction will deliver a substantial cash premium, and we believe it is the best path forward for Twitter’s stockholders.Bret Taylor, Twitter’s Independent Board Chair
Twitter has a purpose and relevance that impacts the entire world. Deeply proud of our teams and inspired by the work that has never been more important.Parag Agrawal, Twitter’s CEO
Twitter being a public company was due to hold an earnings call later this week for Q1 2022 results, that call has now been cancelled. Musk will take the company private and one of the key reasons to do such a thing is to make the difficult changes to the platform (like killing the bots) that will reduce the overall monthly active user counts, something that would typically tank the stock.
With a private company, there is not the same reporting requirements to shareholders, so this can be done in stealth. It is likely that with the removal of bots, the platform improves the experience. which will be key to growing real users over time.