Elon Musk personality makes money from Twitter
Although the billionaire announced that he was buying Twitter not for profit, the billionaire had an idea to charge a fee for this social network.
According to Reuters, when negotiating with a financial support partner in the acquisition of Twitter, Elon Musk said he would reduce the salaries of leaders and board members to save costs, and proposed a plan. new business.
Specifically, he came up with the idea of charging when users embed tweets or quote content from verified accounts (with a green check) into 3rd party websites and services.
Previously, from the beginning of April, the richest person in the world had hinted at a series of proposals to change the working mechanism of Twitter, including the paid service Twitter Blue, adding the option to pay with cryptocurrency, Reduce dependence on advertising.
When talking with banks to find loans for a $44 billion deal, Elon Musk pledged that Twitter would generate enough cash flow to repay the debt. Along with the business idea, he also wants to cut the salaries of the board members, saving about $3 million a year.
According to Reuters, Elon Musk eventually persuaded partners to lend $13 billion from his Twitter business plan and an additional $12.5 billion based on the mortgage of Tesla stock he was holding.
The rest of the deal will be paid out with the personal wealth of the world's richest person. In the past week, Elon Musk successfully sold a significant amount of Tesla shares and earned $ 8.5 billion. This could be part of a plan to raise money to buy back Twitter.
The $13 billion loan represents seven times Twitter's projected 2022 revenue, excluding interest, taxes, and amortization. Obviously, this lending decision is highly risky for investment funds and banks.
In addition, some banks also decided not to participate in the deal due to concerns about Elon Musk's unpredictable temperament. He could suddenly remove some key Twitter figures, putting the social network's business at stake.
Elon Musk wants to put Twitter back on the stock exchange within the next 3 years instead of remaining as a private company.
On the negotiating table with investors, Elon Musk shared his plan to make Twitter a public company within 3 years after acquiring the platform.
The Tesla CEO's deal to buy Twitter is expected to be completed by the end of the year if it is approved by shareholders and regulators. In theory, Twitter would become a privately owned company.
Earlier, Reuters reported that Musk was in discussions with major investors, including private equity firms and individuals with high net worth, to fund the acquisition of Twitter, helping to reduce the amount of money. the pocket that Musk has to pay ($21 billion). Potential names include Apollo Global Management Inc and Ares Management Corp.
According to the WSJ, some companies pursue a strategy of privatization, solving problems without being judged by shareholders and then returning to the stock exchange in about 5 years. That's also Musk's plan for Twitter, giving investors confidence in the company's ability to improve business quickly.
After announcing the acquisition of Twitter, the world's richest billionaire shared a number of plans such as reducing the level of content censorship, lowering salaries for leaders to save costs, bringing the idea of collecting users to a company. feature number. However, in the past, Musk has abandoned many of the plans he made for electric car company Tesla.
Despite owning a net worth of more than $250 billion, Bloomberg says Musk only has about $3 billion in cash. Several banks have accepted a $13 billion loan to Musk, secured by Twitter assets. Banks not agreeing to increase loans because Twitter's limited cash flow could lead to trouble with financial regulators.
According to a filing with the Securities and Exchange Commission (SEC) on April 29, Musk sold an additional 5.2 million shares of electric car company Tesla, worth more than $4 billion. Including both trading sessions on April 26 and 27, the billionaire sold a total of 9.6 million Tesla shares, equivalent to $8.4 billion.
Although not disclosing the specific reason, many investors believe that this is a move for Musk to prepare money for the acquisition of Twitter. If either party unilaterally cancels the agreement, that party will have to pay a termination fee of up to 1 billion USD.
Elon Musk's determination to acquire Twitter is to promote free speech on the social network, but this goal has experts worried.
The news that Musk wants to take control of Twitter has appeared since late March as he sought to buy back as many shares of this company as possible. In early April, a filing with the US Securities and Exchange Commission (SEC) showed that the US billionaire owned 9.1% of the social network shares.
Midway through this month, he claimed to have "made the best and final offer" to buy Twitter. He also claimed to have a "Plan B" ready if it failed, and sought to meet privately with some of Twitter's major shareholders to convince them of his bid.
Musk's efforts have made many people question why the richest person in the world, owning a series of large companies, is trying to acquire a social network.
"I think it's very important to have a comprehensive foundation for free speech," Musk explained at the TED conference in mid-May. "Twitter is becoming a digital plaza where issues important to the future of humanity are debated and where people can freely express their views within the bounds of the law."
The US billionaire said that his decision to buy Twitter was not to make money. He wants to take control so that he can make the Twitter algorithm open source and increase transparency with users. He also wants a softer content management policy, limiting indefinite bans and moving to short-term ones.
Musk is not alone in calling for technology platforms to be more transparent with their algorithms. After Facebook's scandal involving former manager Frances Haugen, how algorithms can foster division and direct users to negative content has caused a lot of controversy in the community. Experts fear humans are becoming more and more dominated by algorithms.
Twitter co-founder Jack Dorsey has also repeatedly called for giving users tools to control the social network. He even re-shared Musk's survey question and commented: "The choice of which algorithm to use (or not) should be open to everyone."
However, there is also the opinion that the platform is likely to see more extremist content in the near future - a problem that social media companies have been trying to solve for some time. Musk admits content moderation is "a matter of uncertainty," but it will take time to change.
Musk's ability to change Twitter
Musk has just reached an agreement to buy Twitter, while closing the deal is expected to take several months. Under US law, he is required to notify the Federal Trade Commission and the Department of Justice of his planned takeover of Twitter and the possible delay in the transaction.
Musk also pledged to take Twitter as a private company. When announcing the bid, he wrote in his SEC filing that "since deciding to make my investment, I have realized the company will not thrive in the future, nor serve the social imperatives of society. society in the present. Twitter needs to be transformed into a private company."
Elon Musk is predicted to make some big changes on Twitter in the future. Users of the platform currently have no way to edit tweets other than deleting and reposting. Earlier this month, the US billionaire asked his more than 80 million followers if they wanted an edit button. 73.6% of the more than four million people chose "Yes". A day later, the Twitter communications team confirmed that the company was adding the feature to the platform.
Musk also said he wanted to let people see if their tweets were promoted or demoted. "That can help prevent manipulative content," he said mid-month. Some Twitter insiders revealed that the company's research team has looked into the issue, but the feature seems to be a lot more complicated than expected.
It's still unclear if Musk has made any changes to Twitter's privacy policy. According to some experts, the US billionaire could face backlash if users' data becomes less secure. In fact, owning Twitter is said to give Musk more control over "sensitive" user data than other companies he runs like Tesla and SpaceX.