Bought Twitter Musk lost money? Layout digital currency or real purpose

Musk is frantically "buying, buying, buying."

On April 14, Eastern Time, the U.S. Securities and Exchange Commission (SEC) disclosed that Tesla CEO Elon Musk intends to acquire 100% of Twitter's shares in cash at a price of $54.20 per share. Based on Twitter's latest closing price of $45.08, the acquisition premium is 20%. At the proposed price, Musk would need to spend about $43 billion to acquire Twitter.

Some media even commented on Musk's move: "Musk acquired Twitter! No one on earth can cover his mouth anymore! ”

The uproar caused by Musk buying Twitter has not subsided, and he once again broke out that he wanted to buy Coca-Cola.

Will the future really be like that joke: Musk unified the United States Internet?

Musk willfully bought Twitter

In June 2009, Musk moved to Twitter, and his personal account currently has more than 84 million followers. More than 17,000 tweets were posted. Musk is Twitter's well-deserved "traffic king."

Compared with the sporadic updates of personal lives of most super-rich people on social platforms and the creation of a friendly image of focusing on environmental protection and philanthropy, Musk can be described as mouthless, often speaking without surprise, and always grabbing a place in the center of network popularity.

In March, Musk criticized Twitter's freedom of speech and launched a vote for netizens to comment. Some do-gooders flipped out a "I love Twitter" tweet from Musk in 2017, when a fan left a message asking Musk to buy Twitter, and Musk asked "How much?" ”。

In the face of the coaxing of netizens, Musk immediately implemented what he said and began his own acquisition plan.

On April 4, local time, Twitter announced that Musk has purchased 9.2% of Twitter shares, becoming the company's largest shareholder. Since then, Twitter's board of directors has announced the appointment of Musk as a director of the company, but its shareholding ratio must not exceed the company's stipulated 14.9%.

Just when netizens thought that the richest man had completed his goal, Musk announced five days later that he would give up his twitter board seat and continue to increase his stake, aiming directly at the acquisition of the company.

For the rich and wayward Musk, the cost is not an issue. On April 14, Musk made a high-profile announcement that he would buy all of Twitter's shares at $54.20 per share, a 38% premium to the day before he publicly announced his investment in Twitter. Musk claims that he doesn't care about making money, he wants to take down Twitter, and his goal is to build a trusted and broadly inclusive public platform.

Twitter's board of directors immediately panicked, announcing that it would implement a "poison pill plan" to prevent Musk, that is, to use low-priced measures to issue new shares or increase debt to increase the acquisition cost of the acquirer and retain the controlling interest. According to media reports, employees within Twitter have a repulsive attitude toward Musk's plan, but the company's leadership has not communicated with employees.

Just when the outside world maintained a wait-and-see attitude towards the acquisition, the attitude of The Twitter board of directors suddenly took a one hundred and eighty degree turn, after all, the other party gave too much.

On April 26, Twitter announced in an official statement that it had accepted Musk's offer to buy the company for $44 billion. Upon completion of the transaction, Twitter will become a privately held company. Twitter CEO Agrawal said the deal was significant, arguing that "Twitter's purpose and relevance affect the whole world."

At the same time, Musk also issued an official statement, stressing: "Freedom of speech is the cornerstone of democratic operation, and Twitter is a digital town square where people discuss issues that are vital to the future of humanity." ”

Musk also laid out a blueprint for his ideal social platform, saying, "I want to make Twitter better than ever by enhancing the product with new features, making algorithms open source to increase trust, beating spam bots, and authenticating everyone." ”

Musk's "Little Abacus"

Musk's Twitter acquisition plan has been supported by a heavyweight from beginning to end: Jack Dorsey, Twitter's co-founder and former CEO.

Dorsey and Musk are like-minded, and although their personal relationship is not close, they are quite consistent in their views on digital currency and social media, and often interact on Twitter.

Therefore, there is a view that Musk is not a "stupid person with a lot of money" willfully buying Twitter, behind or laying out his own digital currency plan.

In November 2021, Dorsey resigned as CEO of Twitter, spending more time on payments company Square and cryptocurrencies. At the time, Dorsey declared that Twitter should come out of the founder's management period, when insiders said that aggressive expansion pressure from investors forced Dorsey to leave.

Dorsey has repeatedly said that his goal is to build a decentralized online world and decentralize social platforms, and he feels deeply guilty about Twitter's role in the current "centralized internet".

After Musk and Twitter reached an acquisition deal, Dorsey praised Musk as the only "solution" to Twitter's current problems that he trusted, believing that Musk's mission was to "deliver the light of consciousness."

Dorsey wrote on his personal account: "As a company, Twitter has always been my heart disease and my biggest regret. Because it has been swayed by Wall Street, constrained by advertising models. Now Musk will take Twitter back from Wall Street, the first step in the right direction. ”

Dorsey also said that Twitter's current CEO Agravar's goal is also to create a most trusted and widely inclusive platform, in line with Musk's direction. The rhetoric seemed to imply that the actual helmsman of Twitter in the future would remain Agravar.

On April 14, Musk said in a TED discussion that free speech should tolerate different kinds of speech, and he believes that the worst comments should also be left on Twitter.

As the midterm elections in the United States approached, some media said that the Democratic Party was deeply worried about Musk's acquisition of Twitter, and a number of social organizations voiced their call on Musk not to let Twitter become a petri dish for hate speech and lies. The White House press secretary said: "Regardless of who owns or operates Twitter, tech platforms must be held accountable for the harm it causes." ”

Seeing that it is going to become the focus again, Musk chose to make an ambiguous statement, and seeing that he could not get out of the cusp of the storm, Musk chose to shift the focus with a new acquisition target.

On April 28, Musk tweeted that he wanted to buy Coca-Cola and reintroduce cocaine.

Is the acquisition of Twitter a loss-making transaction?

Considering that Coca-Cola's current total market capitalization is $279.8 billion, and Musk's net worth is about $252 billion, the wholly-owned acquisition of Coca-Cola is most likely just a joke.

Raising $44 billion to buy Twitter would require Musk to spend a lot of effort. Musk owns a 17 percent stake in Tesla and has a market capitalization of about $170 billion. The rest of Musk's wealth comes mainly from SpaceX's valuation, because SpaceX is not listed, and it is difficult to exchange this wealth for cash.

For Twitter, Musk has to trade Tesla. According to SEC documents, Musk reduced his stake in Tesla from April 26 to 28, cashing out $8.5 billion in cash.

According to the rules, Tesla allows executives to use stock mortgages, capped at 25% of the value of the stock. According to the agreement released by Twitter, Musk has secured $25.5 billion in debt and margin loan financing commitments and will provide about $21 billion in equity financing commitments.

Judging from the financial report data, Musk's acquisition of Twitter is indeed not to make money.

In 2020, Twitter had a net loss of $1.14 billion; in 2021, Twitter had a net loss of $221 million. In the first quarter of 2022, Twitter achieved a net profit of $513 million from the sale of mobile advertising platform MoPub, but the operating loss still reached $128 million.

In contrast, Tesla's total revenue in the first quarter of 2022 alone was as high as $18.756 billion, and its net profit was $3.318 billion, a year-on-year surge of nearly 7 times. Among them, the auto business revenue reached 16.86 billion US dollars, an increase of 87% year-on-year; not only that, the gross profit margin of the auto business reached a record 32.9%, for Tesla's performance, Musk very politely said that it is only a stage achievement, he is confident that the company can achieve 50% growth every year, and eventually reach the goal of 20 million vehicles per year.

From a business perspective, it would be unwise to dilute your control of Tesla and pursue Twitter, and the $44 billion expense is not a small amount, there will be no return in the short term, and may never be able to recover the costs with Twitter itself.

Therefore, there has always been a cool view that Musk is planning to lay out the digital currency business. In fact, on the proposal for Twitter's payment method, Musk said that users should be allowed to pay for subscriptions with Dogecoin.

Musk has been advocating digital currencies before, he personally holds Bitcoin, Ethereum and Dogecoin, Tesla and SpaceX only hold Bitcoin. In April 2019, Musk was elected "CEO of Dogecoin" by a large number of votes, and he also tweeted that Dogecoin is his favorite digital currency. After the news that Musk became The largest shareholder of Twitter, Dogecoin ushered in another wave of sharp gains, and the price hit a new high in two months, and the current price is $0.16 / one.

In February 2021, Tesla disclosed a $1.5 billion investment in Bitcoin, and soon after announced that it would begin accepting Bitcoin as a payment method for its vehicles.

He also said that bitcoin mining is shifting to renewable energy, and Tesla is likely to resume using bitcoin as a payment method for car purchases (Tesla has previously eliminated digital currency payment methods because of the decline in bitcoin).

Reviewing Musk's layout in recent years, it is also very clear that he covets Zuckerberg's business. Although Musk did not shout like Zuckerberg to join the blockchain, digital currency, and metaverse, his layout for these aspects has never decreased.

In addition, Musk, who is always living in the headlines, has a social platform that he masters is really necessary.

In 2017, Musk tweeted: "Tesla does not advertise, nor does it pay for endorsements." Instead, we'll use the money to make the product better. In 2020, Musk also disbanded Tesla's north American public relations department.

It is true that Tesla ads are not seen in the streets and alleys, but volkswagen can always see Musk and Tesla in the news. To the outside world, Musk is the spokesperson and embodiment of his own brand. His rhetoric and hands-on efforts have made Tesla and SpaceX always represent the image of future life and cutting-edge technology. Enterprises have a future in order to maintain a high market capitalization and high valuation in the capital market.

Musk must maintain his own heat, maintaining voice channels and platforms. Building a new social platform from scratch is not a wise choice for Musk, who is good at hardware manufacturing, and it is more secure to pick ready-made fruits - Twitter is definitely a website that cannot be ignored in the era of social networks, and has an irreplaceable influence in the field of politics and economy.

In addition, mastering the platform and software may provide an effective connection carrier for Tesla, which already has mature hardware terminals, and SpaceX, which has a more perfect satellite network layout, so that musk's industry is more closely related.

According to people familiar with the matter, Musk is willing to let Twitter re-list within three years. Based on this speculation, Musk is not satisfied with Twitter's current market value, and he believes that under his leadership, Twitter will have more potential space in the future.

Perhaps, the madman has already figured out his own Twitter transformation plan.