As of April 25th, 2022, Elon Musk is the new owner of Twitter. It may come as a surprise to some, but Musk has been an active user on the platform for years with over 83 million followers and was the largest shareholder earlier in 2022. His actions over the past few months hinted he had his eye on the social media platform known for being the space to discuss trending topics and the latest news.
The start of Musk’s increased interest in Twitter began in January. While the rest of us were focused on our “new year, new you” healthy habits, Musk began buying more and more shares of Twitter. He also began posting content on the platform frequently and even posted several Twitter polls to gauge how users felt about the platform.
For example, his tweet on April 4th was a poll that asked if users wanted an edit button: (currently the platform doesn’t allow users to edit tweets after publishing them)
On April 5th, Twitter announced that it was working on an edit button, but that they didn’t get the idea from Musk’s poll. As Twitter’s largest shareholder, it’s hard not to wonder if Musk’s poll had some influence over Twitter’s decision.
Another announcement came on April 10th, this time from CEO Parag Agrawal. He announced that Musk had been offered a seat on the board but declined it. Being on the board would prevent Musk from owning a majority stake in the company, which could be the reason Musk rejected the offer. Musk probably also had bigger ambitions for his role at Twitter, as he offered to buy the company April 14th. After some back and forth, the deal went through. On April 25th, Musk acquired Twitter for $44 billion – the largest deal ever to take the company private. The deal is subject to regulatory approvals and a vote of Twitter shareholders, but it is expected to pass after unanimous approval by Twitter’s board.
Musk’s Plans for Twitter
There’s been speculation about what Musk’s next moves are for Twitter. He’s been known to describe himself as a “free speech absolutist” and, before acquiring Twitter, had tweeted a poll asking users if they felt the platform adhered to the principle. Some speculate that this means users who had been previously banned (such as Donald Trump) would be welcomed back to the platform.
Musk has also expressed his desires for Twitter to stop running ads and decrease the subscription price for Twitter Blue. According to the Wall Street Journal, 90 percent of Twitter’s revenue comes from advertising, so it will be interesting to see Musk’s ideas for the platform to keep making money. Another suggestion is to allow subscriptions to be paid for in Dogecoin, which is a cryptocurrency that was based on a meme of a Shiba Inu dog.
On May 6th, the New York Times revealed that they had some information on what Musk plans to do. Musk presented a pitch deck to investors that outlined his plans, which addressed some speculations but left others in the dark.
In the next few years, Musk aims to decrease advertising and bring it down to less than 50 percent of Twitter’s revenue. Rather than rely on advertising, Musk wants the platform to drive revenue from improving its payment abilities and growing Twitter Blue subscribers. A new product (known so far as “X”) will also drive subscriptions, although very little is known about the product at this time.
Musk is predicting that his changes will lead to a significant increase in revenue, estimating that Twitter will reach $26.4 billion in revenue by 2028. He will also raise free cash flow to $9.4 billion by 2028. More employees will be needed to help hit these goals, particularly engineers to help bring forth the proposed platform changes.
The change in ownership at Twitter and possible future changes will have impacts on both consumers and advertisers.
If advertising is deprioritized on the platform, the digital marketing industry will be heavily impacted. Whether it’s on another social media platform or different advertising medium, brands will need to decide how to reallocate advertising dollars. Twitter has been known as the platform that advertisers use to announce new messaging, product launches, etc., and it will be interesting to see what platform takes on this role if ads aren’t its main source of revenue.
Free speech and relaxed rules on Twitter will also have an impact on consumers and advertisers. Twitter currently has policies in place that ban content such as harassment and label tweets with misinformation. Depending on how far Musk takes his “free speech absolutist” ideas to the platform, we could see a relaxing of rules around what types of content can be posted to Twitter. Controversial figures like Donald Trump could come back to the platform and be able to post freely. If consumers no longer feel safe on the platform, they’ll go somewhere else. Advertisers could also have additional brand safety concerns and might not want to run ads in a potentially hostile or polarizing environment.
For now, both consumers and advertisers will be closely watching for additional updates on Musk’s plans for Twitter. Advertisers should begin planning on how to reallocate dollars to other social platforms or advertising channels. When product X debuts, consumers will need to evaluate if it’s valuable to them. Musk has high goals for Twitter and, much like his other projects (Tesla, SpaceX, The Boring Company, etc.), he’s out to make an impact.