The acquisition process of Twitter started on 14th April 2022 and concluded on 27 October 2022. The business magnet started buying shares of American social media company Twitter Inc in January 2022, eventually becoming the company’s largest shareholder in April with a 9.1% ownership stake.
What Will Happen to Twitter After the Completion of Takeover by Elon Musk?
After a few days fight over whether Elon Musk would become its new owner, Twitter appears to have entered a new chapter with a reported exit of several top executives. Elon has already indicated and said, “He is against censorship”. It goes far beyond the law. After completing his $44Bn deal to buy the social media company, some controversies took place like Twitter’s CEO (Parag Agrawal), the chief financial officer (Ned Segal), and the head of the Legal policy, trust, and safety (Vijaya Gadde) were ousted. With the Musk’s tweet, the main concern and a question has turned to what he plans to do with this new venture in the weeks and even in months to come.
A Big Deal in Billion Dollars
After declare the deal, Musk’s concerns around free speech made headlines that has drawn attention of users from across the world. He is a self-proclaimed free speech absolutist – raised concerns about the platform downplaying certain posts with its algorithms that curate what a user sees.
Musk’s financing for the takeover includes $13bn of bank debt that will sit on Twitter’s balance sheet. The debt will need to be paid for and in its most recent results Twitter generated negative fee cash-flow – spending more cash to run the business in comparison to taking in nearly $124M. Twitter will have to do better than that financially and cost cuts have featured in musk’s thinking. Musk has already told the investors who are interested in funding his acquisition of the company that he plans to cut 75% of the workforce.
Reports from the top newspapers indicate that twitter employee on Musk’s first visit to the company on 5th October that he didn’t plan to lay off that many workers. He is still expected to make some cuts. Musk had already indicated he wanted to quintuple Twitter’s annual revenue to $26.4bn by 2028. In addition to this, advertising accounts for 90% of Twitter’s revenue and Musk has raised a number of suggestions to generate turnover by other means. His financial backers will be looking for revenue growth. A consortium of banks is committed to raise $13 bn in debt as part of the financing and the contributors to the more than $30bn in equity pledged by Musk will want the business to do well.
With some controversial tweets, Twitter also got decrement in the number of users. Some other social media platforms are trying to move head as alternative. Let’s what happens in future with the Twitter.