When "Iron Man of Silicon Valley" said he wanted to take 100% stake in Twitter, many people didn't believe it.
A social media "Internet celebrity", a "half-old Xu Niang" who does not make much money and has no story to tell, is worth Musk spending $44 billion to "save"? Even at the expense of letting his "pro-son" Tesla evaporate the market value of hundreds of billions of dollars overnight.
This sounds like a story of a domineering president who is "rich and willful". But as smart as Musk, will he really make a loss-making deal?
Twitter may be vastly underestimating the value of Twitter to Musk, and without Twitter, Musk is unlikely to be the world's richest man in just three years.
In the process of building a super empire and moving towards the first trillionaire in human history, this "key" to the field of public opinion is precisely the most easily overlooked, but also a crucial secret weapon.
01
Rich and willful?
The day after taking down Twitter, Tesla posted its biggest drop in a year and a half.
On April 14, the "rich and wayward" Musk made a high-profile announcement that he would buy a 100% stake in Twitter at a price of $54.20 per share, a 38% premium to the day before he publicly announced his investment in Twitter.
At first, Twitter's board also tried to take self-defense measures such as the poison pill plan to actively resist, but Musk, who was overlord the bow, gave too much, and in just ten days, Twitter's directors opened the door to it. Such a respectful attitude has caused netizens to laugh that this is simply a copy of Napoleon's return to Paris from Elba.
On April 25, Twitter's board announced that it had reached a definitive agreement with Tesla CEO Elon Musk, who pocketed Twitter with a "generous offer" of $44 billion.
Some market analysis pointed out that for a social platform whose current management and business model is inferior to competitors, and whose stock price upside has been sealed in the eyes of Wall Street, Musk's huge capital acquisition is tantamount to "impulse consumption".
Not only that, but the privatization of Twitter has also raised concerns that Twitter will distract Musk from managing companies such as Tesla, and Musk will have to sell his shares to raise funds for privatization.
The next day, Tesla's stock price plummeted in response. On April 26, Tesla fell as much as 12.18% to $876.42 per share, and its market value shrank by more than $120 billion. This also caused Musk's personal wealth to "evaporate" $21 billion overnight, no more, no less just fell "half a tweet".
Paying such a "tragic price" for the acquisition of Twitter makes people wonder: for such a shrewd Musk, is it "often walking by the river where there are not wet shoes", or is there another big game behind it?
02
The value of the field of public opinion
On March 25, Musk launched an investigation that took the lead in tweeting: "Do you think Twitter follows the principle of free speech?"
As a result, 70% of the netizens who participated in the survey said "no"; on the evening of April 14, in the acquisition invitation letter disclosed in a 13D document, Musk continued to tweet the status quo of "free speech" and launched a fierce attack; after the deal was negotiated on April 25, Musk tweeted his high concern about freedom of speech:
"Free speech is the cornerstone of the proper functioning of democracy, and Twitter is a digital city square where people discuss issues that are vital to the future of humanity."
On the surface, freedom of speech is an important vision of Musk to create a "Twitter republic". But if you think about it, is this domineering president who "goes to heaven and earth and can do everything" and spends thousands of dollars to buy a "hot potato" that "exaggerates the number of 1.9 million users" just to protect "freedom of speech"?
The answer obviously won't be that simple.
The story begins 4 years ago. In March 2018, Tesla's board of directors signed an extremely aggressive compensation package with Musk.
According to the plan, Musk will not have any salary or cash rewards for the next decade, and his income will be fully linked to Tesla's market capitalization and operating performance. If he can lead Tesla to 12 specific "milestones", then he can receive a total of 20.264 million stock option awards (the total size has expanded to 101 million shares after the 2020 stock split).
Since then, the "gamblers" Musk has bet his wealth on Tesla's specific "milestones" one after another.
However, the "big bargain" of these more than 100 million shares of options is not so easy to earn. In 2018, when the acceptance of electric vehicles is much lower than the current one, the market value target of up to $650 billion and the revenue target of $175 billion are nothing less than "fantasy" for Tesla, which was only $60 billion at that time and even "on the verge of bankruptcy".
But if done, Musk could become the richest man on the planet.
At this time, the "Silicon Valley Iron Man", who was worth only about $12 billion at the time, silently picked up his mobile phone and became a crazy tweet "sender".
In fact, as early as 2013, Musk had suffered a wave of "Twitter dividends". After the first peak in tweets in 2013, cnn and other media quickly appeared on the financial page of the headlines such as "Tesla stock price rose 40% this week". After signing the above-mentioned equity incentive agreement in the spring of 2018, Musk's tweet volume was officially "out of control", and his activity increased day by day.
From the delivery of Tesla's new car to the "Falcon 9" rocket to the sky, from showing the magnificent landing plan to Mars to instigating everyone to "speculate in coins", from the verbal sword with Wall Street fund managers to the random interaction with ordinary netizens, from the cross-border dialogue with celebrities from all walks of life to make various outrageous remarks to "stir up the water", Musk has successfully built himself into a super big IP with his genius wisdom and personality charm.
To outsiders, Musk's various "fancy work" seems to be "worthless." But it is not difficult to find that after each "fancy work", Musk's value can achieve an increase.
Today, Musk's Twitter followers have exceeded 86 million, and together with Taylor Swift, Justin Bieber, C. Rowe, Obama and other celebrities from all walks of life, they are the "top stream", and a casual tweet can gain tens of millions of exposures, achieving unparalleled attention for themselves and the brand.
The benefits are also immediate — Tesla doesn't have a PR department as we all know — and Musk's one tweet is enough.
Taking Tesla as an example, under the call of Musk, many people began to organize activities spontaneously and formed a secondary spread on social platforms, further expanding the visibility of the company. In this process, the company does not have to pay any advertising fees at all. As Musk put it in a tweet in 2019:
"Tesla doesn't advertise and doesn't pay for endorsements. Instead, we'll use the money to make the product better. ”
More than that, Musk, the "super big V" who became Twitter, brought different benefits to his company. As Bloomberg opinion columnist Matt Levine describes:
On the one hand, by publishing various "wild words" such as Mars Base, Starlink Project, Underworld, Brain Science, Bitcoin and other "wild words" and cashing in some of them, Musk successfully built himself into a "geek version of modern Edison" image, and gradually cultivated a large number of "die-hard fans" users;
On the other hand, through personal popularity, Musk has the ability to bypass Wall Street and sell shares directly to new shareholders to raise large amounts of dollars and maintain the company's high valuation. This is crucial for "asset-heavy" companies such as Tesla and Space X, which build cars and rockets - the ability to obtain cheap funds is directly related to the development prospects of such companies and even the survival of enterprises to a certain extent.
In addition, through Twitter remarks, Musk can also "accurately control" investor expectations and even affect asset prices like the Federal Reserve, and easily play with various professional and non-professional investors in the palm of the stock, and then reap huge benefits.
Through the tweet - Musk - the "positive feedback" between the company, today's Tesla market value has long exceeded 900 billion, has long exceeded the seemingly unattainable market value target of 650 billion yuan 4 years ago, and Musk himself, with a net worth of more than 250 billion US dollars, easily topped the world's richest man. Such an astonishing rate of wealth accumulation can be described as unprecedented.
Therefore, the outside world may have greatly underestimated the value of Twitter to Musk, and through Twitter, Musk has set off a modern marketing and corporate governance revolution in some way.
With this medium, he can easily "face the masses", mingle with the general public, and maximize the value of his top IP. Taking Tesla as an example, through the deep binding with "Silicon Valley Iron Man" Musk, it has benefited greatly in terms of popularity, marketing costs and even capital costs, pushing it to rank among the top ten in the US market capitalization when it is not yet profitable.
Musk understands that without his Twitter account, it is almost impossible for him to surpass the old super-rich such as Bill Gates and Bezos in just nine months.
Therefore, the importance of Twitter to Musk is comparable to the importance of Twitter to former US President Trump, who "ruled the country by Twitter".
In this context, considering Musk's "old vendetta and new grudge" with the SEC of the US Securities and Exchange Commission, Twitter's increasingly harsh Twitter speech censorship mechanism and the unpleasant experience that has led to its recent frequent deletions, and then associated with Trump's tragic suspension of the "tragic situation", for Musk, discussing Twitter's business model and Instagram is better or worse, whether Twitter is worth 44 billion or 30 billion may not make sense, and firmly control the "key" of the public opinion field in his own hands. It may be the "bottom-line thinking" of the world's richest man.
03
The road to trillionaires?
For Musk, a "Silicon Valley Iron Man" who is keen to "dance on the tip of the knife", it is still a bit unimaginative to think that his acquisition of Twitter is only to consolidate his own kingdom.
Readmargins columnist Ranjan Roy put forward a bolder idea, which musk is preparing for his next "huge pay package", saying: "We may soon see some incredibly bold and amazing compensation packages"; while Bloomberg opinion columnist Matt Levine is more blunt - the deep reason Musk bought Twitter may be because "he likes money".
For Musk, the situation now may be like this:
He is well aware that unfettered Twitter accounts are critical to current and future business interests, and that regulatory pressures are constantly threatening Musk's "voice channel."
Driven by Tesla's strong first-quarter results and stock price performance, Musk "easily" completed the milestones to be reached in batches 9 to 11 of the 12 option awards and unlocked a $23 billion compensation package, so it's time to consider the next compensation package.
Now is probably the most optimistic moment Tesla has ever had. Next, the automotive supply chain is facing an impact in the world, the epidemic has led to a decline in automobile consumption, the global "rise of electric vehicles", and the pressure of Tesla competition has increased.
Tesla's stock price has been consolidating for half a year, and hedge funds such as Musk and his brothers, Cathie Wood and ARK have sold Tesla stock "one after another", and its future growth space may be limited. Especially at the moment, inflation remains high, and the Fed raises interest rates and shrinks its balance sheet, which is not friendly to growth stocks.
Ranjan Roy believes that on the road to becoming the first "trillion-dollar rich man" in human history, Tesla alone cannot be achieved.
Over the past few months, Musk has been preparing for the next step, bringing together different business interests in unexpected ways.
At first, I doubted that Musk's acquisition of Twitter was serious, but now, I'm starting to believe it's part of a bigger strategy. More fragmented information is starting to surface, for example, a new "super holding company" has just been formed.
On April 22, the news that Musk registered "X Holdings" holding company in Delaware, the United States, sparked speculation.
Some analysts pointed out that "X Holdings" is not only set up for the acquisition of Twitter, its ultimate goal may be to bring Musk's companies together under a parent company, becoming a super business empire that includes Tesla, SpaceX, Twitter, tunneling company Boring Company, brain microchip startup Neuralink and other companies.
If the "Big Mac Group" is really successful, Twitter, as the "center of public opinion", will be indispensable, after all, Tesla has successfully set a precedent. As Ranjan Roy puts it:
"For Musk now, Twitter is both a financial asset that can be undervalued, a political asset, and a marketing tool."
In the latest TED interview in April, Musk slammed this as nothing more than "short-term thinking" by Wall Street investors.
Perhaps, for a legend who wrote "My mission is to save mankind" at the age of 15, and has innovated and succeeded extensively in various fields such as the Internet, climate change, earth dependence, and human degradation in the past two decades, praise and criticism, stock price fluctuations, Wall Street disturbances and the geometry of wealth are only "by-products" on the road to achieving the mission, but only irrelevant noises on the road of legendary life.
Whether it is "Edison" or "speculator", whether it is "chasing fame and profit" or "saving mankind", we may not know. What is certain, though, is that Musk, who successfully acquired Twitter, is unlikely to become "more low-key."
In the foreseeable future, you may be able to read about him as soon as you open Twitter — more than anywhere else.
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This article does not constitute personal investment advice and does not take into account the specific investment objectives, financial situation or needs of individual users. Users should consider whether any opinions, opinions or conclusions in this article are appropriate for their particular situation. The market is risky, investment needs to be cautious, please judge and make decisions independently.
The outside world may have greatly underestimated the value of Twitter to Musk