"Twitter has extraordinary potential. I will unlock it." Musk's Decision to Purchase Twitter

By Lauren MacDonald | May 5, 2022

Imagine you amass billions of dollars in wealth. What would you do with it? If you’re Elon Musk, you decide to buy Twitter. As the new owner of Twitter, Musk intends on implementing changes that would impact how Twitter functions as a company. Simply the announcement that Musk was considering buying Twitter swayed the price of the stock, demonstrating the extreme impact he has on the company. Each Tweet he writes has an astronomical impact on society and, occasionally, on the value of crypto currency. As of April 25, his influence over Twitter has changed significantly through his decision to purchase the company.

Musk owned about 9% of the company before striking the $44 billion deal on Monday to purchase the company outright. Before purchasing Twitter, Musk considered joining the board but eventually decided their influence would not be great enough to support the changes he wants to implement. In his filing made to the SEC on April 13, Musk indicated that he would buy the company at a value of $54.20 per share. This price is a 54% increase in value as compared to the price of the stock on the day that Musk began buying shares. Twitter accepted this deal on April 25th. The deal was structured as an all-cash purchase with $25.5 billion of debt and margin loan financing and Musk is providing a $21 billion equity commitment, according to Reuters.

Musk claims that his intentions are not economical, but social. He recently proposed several changes to the way the company interacts with users, specifically pointing at Twitter Blue, the company’s new attempt at a subscription service. He claimed that Twitter Blue should ban ads and consider allowing dogecoin as payment for the subscription. He also suggested converting the Twitter headquarters in San Francisco into a homeless shelter, as “no one shows up anyway”.

The owner of Tesla and SpaceX as the new owner of Twitter will undoubtedly have effects on the way Twitter is managed, but it will also mean the company would go private. The next move for investors is hard to predict, and the world will have to eagerly await Elon Musk’s next Tweet to see what he decides.

Edited by Zachary Elias