Will Elon Musk do a Tesla with Twitter?

What do you do at a sink? You clean up everything there. When South African-born Elon Reeve Musk walked into Twitter headquarters in San Francisco, carrying a bathroom sink with both hands last month, he made his intentions amply clear. He wants to squeeze more money out of the social media platform by cleaning it up from scratch. The world's richest person and the founder of Tesla Motors paid a whopping $44 billion for Twitter, the global social media platform that, according to its maverick new owner, is losing $4 million a day. Paying $44 billion for a company that is burning $4 million a day is not a good business decision. And as if these recurring losses are not enough, Twitter has accumulated a debt pile of $13 billion!

But the fact of the matter is that no one has asked Musk to buy the platform. He himself made an unsolicited offer for Twitter on April 14 this year on his Twitter handle! The final offer, at $54.20 a share and closed on October 27 this year, represented a 50 per cent premium over the prevailing stock price of the social media platform. Prior to that, Musk started accumulating Twitter shares in January 2022 and spent nearly $2.64 billion to pick up a 9.2 per cent stake in it by April 4 this year. This reveals that maverick Musk has a clear intention to go for the platform.

Interestingly, Twitter has played a key role in the world's richest person's success as a businessman, founder of Tesla Motors (Tesla, Inc) and owner of SpaceX. Musk, who opened his Twitter account in June 2010, has a follower base of over 106 million now. Known for making controversial remarks and major business announcements on Twitter, his presence on the microblogging site helped his businesses a lot. That way, he owes a lot to the social media platform for his success. Is this what has prompted him to make the takeover bid without digging deep into Twitter's financials? Going by the events that followed his bid offer, it looks like so. Shockingly, he went back on his offer after Twitter's Board, post its initial reluctance, accepted his acquisition offer. That shows he did not do his homework well. Finally, he had to bite the bullet and buy the platform after Twitter management knocked at a court's door.

But the Twitter deal cost him dearly in many ways. He lost billions of dollars on paper as Tesla's shares nosedived in the last few months. So is his market wealth. On the day the deal was announced, Tesla's share tanked 12 per cent and the electric carmaker lost $125 billion in market capitalisation, thus making Musk poorer by $30 billion! And he lost a total of a whopping $80.4 billion wealth so far this year. That's a bit less than the entire fortune of Mukesh Ambani, India's second richest person with a fortune of $89 billion! So, Musk has already lost nearly twice of what is paying for Twitter. But he is still the world's richest person with a total net worth of $190 billion, as per the Bloomberg Billionaires Index on Sunday.

Given the huge cost he has paid for Twitter acquisition thus far, it's no surprise that Musk is acting very fast to turn its fortunes for good. He already sacked Twitter's top management. His massive layoff plans under which nearly 50 per cent of Twitter's 7,500 employees lost jobs, are also a part of his plans to turn around the social media platform. So is also the $8-a- month subscription plan that he has rolled out for 'Blue Tick' verification on Twitter. Going by the way Musk is moving now, he truly means business. But sacking so many employees at one go will not only take a toll on Twitter, but will also cripple its operations and executing capabilities.

But Musk; who got married three times, parted ways with a live-in partner recently, and has a total of 10 children; knows how to squeeze massive amounts of riches out of nothing. He did that with Tesla. He did that with SpaceX. He did that with many of his other ventures. He also did that with stock markets. For instance, Nasdaq-listed Tesla, Inc, which makes electric cars and solar energy products, has a market capitalisation of a humungous $650.10 billion. But it sold less than a million cars in 2021! Let's compare that with the market capitalisation of Toyota Motor Corporation and General Motors (GM) which sold 9.5 million and 6.3 million vehicles respectively worldwide in 2021. While Toyota's m-cap on the New York Stock Exchange (NYSE) stood at $224.86 billion, that of GM was just $55.41 billion on the same exchange. The combined market capitalisation of the two auto giants is less than half of Tesla's! This shows how good Elon Musk is at generating wealth. But will he do a Tesla with Twitter? It should not surprise us if he does that as he has mastered the art of making money like no one else.

But a sink does not truly represent what he has to do at Twitter. He should have walked into Twitter headquarters with a much starker object that showcases what is in store for him and Twitter. Hope he does that when Twitter turns one under his mercurial leadership. Of course, Musk is now creating a sort of chaos at Twitter to make it more meaningful financially. But in the process, he should not undermine the tenets of free speech he has been advocating so passionately for so long, as Twitter, with its user base of around 300 million, is one of the most influential social media platforms in the world. Will that happen?