Elon musk finally takes charge of Twitter and fired the CEO Parag Agrawal and others.
Elon Musk tweeted that the bird app was freed on the 27th of October, 2022 and swiftly changed his Twitter handle to “Chief Twit” as he took control of the bird app, adding Twitter to his long list of companies which includes Tesla and SpaceX. The main question is whether the billionaire Tesla CEO can grow the business while fulfilling his promise to transform the social media platform into a bastion of free speech. Balancing those goals is bound to create an Everest-like uphill battle said Wedbush analyst Dan Ives told CBS MoneyWatch, noting that he gives Musk a less than 50% chance to turn this around.
Elon Musk offered a range of statements, a few of which seem contradictory, about his vision for Twitter. But some of his challenges are clear according to the analyst.
Firstly, Musk paid a huge amount in buying Twitter for $44 billion, you might be wondering why Elon Musk bought Twitter, the major reason why Elon Musk bought Twitter this week is that he had little choice. The world’s richest man spent months trying to back out of the $44 billion purchase agreement he originally signed in April. But the uncertainty was so disruptive to Twitter’s business that it sued him in the Delaware Court of Chancery to force the deal’s completion, and a judge gave a Friday deadline to complete the deal or face a November trial that Musk was likely to lose, which will put pressure on him to slash costs.
Secondly, Twitter has been struggling to attract advertisers forever, which is unlikely to get any easier as the economy slows and possibly enters recession next year. He is buying Twitter as an asset at the worst possible time-Dan Ives said. We are in a middle of a massive social media slowdown. The easy part is to buy Twitter, the hard part is to fix it he added.
At the same time, the New York Stock Exchange began the process of delisting Twitter, which means Elon Musk’s moves won’t be transparent to investors and whoever is observing. And without a share price and big institutional investors to answer to, Musk may feel emboldened to put his stamp on the company, Erik Gordon, a professor of business at the University of Michigan, put up on The Conversation. Three issues are currently occurring as Elon Musk takes the helm at Twitter. Each of them will be discussed below.
1. Winning Over Advertisers
Musk criticized Twitter’s dependence on advertisers, but recently made a statement on Thursday that seemed aimed at soothing their fears. He said he wants the service to be the most respected advertising platform in the world as he assured marketers. But advertising has reduced sharply at Twitter, with the company blaming the “macroenvironment” amid uncertainty surrounding Musk’s acquisition. Advertisement sales rose by 2% in the second quarter, a marked decline from a 23% jump in advertisement revenue during the first quarter.
There are a lot of questions on whether Musk can not only maintain current advertisers but convince new ones to sign up for the platform: About 90% of the service’s revenue stems from advertising.
2. Opening the Free-Speech Floodgates
Musk has said he wants to promote free speech by loose-fitting how Twitter moderates content. Wall Street analysts say that risks unleashing a tide of online toxicity that drives away users and advertisers.
Musk said on Thursday he doesn’t want Twitter to become a “free-for-all hellscape.” But he has previously signalled that he may restore the accounts of some former Twitter users who had been banned for violating the company’s standards and policies. On Thursday, a conservative commentator with Twitter username @catturd2 tweeted to Musk that he was “still Shadowbanned, ghost banned, search banned, and Twitter removed 1200 signal followers today – as usual. “Musk responded on Friday: “I will be digging in more today.”
Uncertainty fills the atmosphere because it is unclear if former Donald Trump will return to the platform, something Musk has said he would allow if he bought Twitter. In case you missed it, Trump was permanently banned from the social media site three days after January six attack on the Capitol because of the risk of further incitement of violence.
Musk might view Trump’s return to Twitter as helping to increase engagement with other users, Ives said. But he would be walking a “political tightrope” in doing so, he also added.
For his part, Trump said on Friday in a post on Truth Social, the conservative-leaning social network backed by his media company, that he is “very happy that Twitter is now in safe hands, and will no longer be run by Radical Left Lunatics and Maniacs that truly hate our country. Twitter must now work hard to rid itself of all of the bots and fake accounts that have hurt it so badly. It will be much smaller, but better.”
3. Masses Discharge might occur
Although Twitter is going private, Musk overpaid for the money-losing business, which will put pressure on him to streamline, Ives said. Musk has said Twitter has more employees than it needs, with the Washington Post recently reporting that he may cut up to 75% of its workforce.
Ives might have thought the job cuts could range from 30% to 50% of the company’s headcount. Yet while Musk can cut costs, “he can’t cut his way to growth,” he added.
After taking control of Twitter, Musk fired CEO Parag Agrawal, Chief Financial Officer Ned Segal, and Chief Legal Counsel Vijaya Gadde, according to the Associated Press, citing people familiar with the deal. Segal confirmed his departure in a series of tweets Friday.
Musk is likely to recruit a seasoned social media executive to take the helm of Twitter, although he will remain deeply involved with the company, Ives predicted. “With Musk, never count him out,” he said. “He’s been able to defy the sceptics again and again.”