The Tribune

By CHRIS ILLING

Business Developer

ActivTrades Corp

www.activtrades.bs

Many consider Elon Musk to be the messiah of the global technology industry. But he got bogged down with his billion dollar plans to take over Twitter. And, at Tesla, the problems are piling up.

Elon Musk is tired: The billionaire has cancelled the agreement to buy the social media service, Twitter. Automotive chief executives once made fun of Elon Musk. The Tesla boss is an announcement world champion who only burns money with his electric cars. Musk proved them all wrong. Tesla is now generating returns on sales on par with Porsche. And hardly anyone seriously denies that the future belongs to e-mobility.

But the recent Twitter takeover battle brings back uncomfortable memories of Musk’s entrepreneurial early days, when it was difficult to be sure whether he was the genius his followers think he is or just a phony. Does he want to save the planet, and accelerate the global switch to renewable energies? Is he actually pursuing the goal of increasing freedom of expression on Twitter? Or is Musk just about power – and a lot of money?

On April 4, 2022, Musk announced in a stock market document that he had bought 73.5m Twitter shares for almost $2.9bn. That corresponded to a 9.2 percent stake, and made the richest person in the world the largest Twitter shareholder. The Twitter share jumped in price, increasing by around 25 percent.

Suddenly, on April 13, Musk started a full-blown takeover attempt. He wanted to buy all the shares in Twitter at a price of $54.20 each, and take the online platform off the stock exchange.

From the outset, it was unclear exactly what Musk intended to do with Twitter, or what leverage he saw to significantly increase the value and benefits of the short message service. This was especially since Musk’s strength so far has been in building new, revolutionary companies such as Tesla or SpaceX, instead of investing in corporations that have been stagnating for years like Twitter.

On May 10, Musk announced his plan to bring Donald Trump back to the platform. Twitter permanently banned the former US president after his supporters stormed the Capitol building in January 2021.

On May 16, in the struggle for the Twitter deal, Musk raised some eyebrows with statements about a possibly lower price. An agreement on a lower bid is “not out of the question”, he said in a video interview. Twitter shares ended the day down about eight percent in US trading at $37.38.

Viewed today, Musk’s $44bn bid back in April was far too high, as technology stocks have fallen into the abyss in the past few months. On June 6, Musk accused Twitter of breaching the agreed terms for the multi-billion dollar takeover. In a letter from his lawyers, it was said that Twitter refuses to release data requested by the entrepreneur about spam and fake user accounts on the platform.

On July 9, Musk cancelled his agreement to buy Twitter. As a reason, his lawyers refer to allegedly insufficient information on the number of fake accounts. Twitter shares fell more than 6 percent in after-hours trading following the announcement.

The time and energy Musk is wasting on Twitter would be better invested at Tesla. In China, Tesla is suffering from the government’s rigid pandemic control. In the US, the NHTSA (National Highway Traffic Safety Administration) is investigating the extent to which Tesla’s autopilot could have caused accidents. And, in Germany, Tesla has already lost its pioneering role in highly automated driving.

Whether Musk can be forced to take over Twitter remains to be seen. However, Twitter will at least try to obtain from Musk the contractual penalty of up to $1bn provided for in the event of a breach of the agreement. Tesla shareholders seem to like the news since Tesla shares are up a notch.