Why is Elon Musk Attempting to Buy Twitter?

In true Musk fashion, he immediately tweeted a poll right after the announcement, having users provide input for Twitter suggestions. 

Twitter offered him a seat on the board, which he initially accepted. Later, he changed his mind since becoming a board member would limit him to owning no more than 15 percent of the company. 

Though there are questions about how serious Musk’s acquisition attempt is, the offer has many wondering what will happen next. 

To understand Musk’s intentions, it is important to know his background. So, who is Elon Musk and how did he become the richest man in the world? 

Elon Musk Background:

In 2021, Musk passed Jeff Bezos as the richest person in the world with a net worth of $151 billion. As of 2022, his net worth is $219 billion. But how did he get to that amount of success? 

Musk was born in Pretoria, South Africa on June 28, 1971. Even since he was a child, he strived to become an entrepreneur and had his first success at the age of 12. 

In 1984, he wrote a game called Blastar which earned the almost-teen $500 after the source code was published in a magazine. 

Later on, he graduated from the University of Pennsylvania in 1995 with two bachelor’s degrees, one in physics and the other in economics. 

At 24 years old, he entered Standford’s Ph.D. program in physics but decided to drop out after two days because he wanted to start a company and saw potential with the internet boom. 

He followed those dreams, launching a software company with his younger brother called Zip2 in 1999. Four years later, Zip2 was sold to Compaq for over $300 million.

 Musk used this profit for the next entrepreneurial venture he co-founded, X.com, which merged with Confinity in 2000. This eventually became what we know today as PayPal. 

eBay acquired PayPal in July 2002, scoring Musk a net return of over $165 million. 

Musk founded SpaceX that same year, earning him the title of founder, CEO, and lead designer for the company. Despite having no formal training in rocketry, he saw an opportunity as NASA began retreating from launching spacecraft. 

In 2010, SpaceX became the first private company to launch a payload into orbit and return it to Earth safely. 

While still pursuing ventures in space, Musk also had an interest in the newer industry of electric cars. 

After investing in Tesla in its early stages, Musk joined as chairman of Tesla’s Board of Directors in 2004. Though many believe he started the company, he actually became Tesla’s 4th CEO in October 2008. 

With each successful venture, Musk became a serial entrepreneur. He now owns a total of six companies, including PayPal, Tesla, SpaceX, OpenAI, Neuralink, and The Boring Company. 

It is obvious that Musk is a successful man and has big plans. So, what is the big deal about him trying to buy Twitter and what does he plan to do with it?

Musk’s Plans:

Musk continuously performs well on Twitter and knows how to keep his audience engaged, so there is no doubt that he understands the platform well. The main question is, why does he want to own it? 

Musk has always been extremely vocal about his support for free speech, which seems to be his biggest motivating factor for purchasing Twitter.

Twitter has been to known take down tweets or even ban users if the content violates its terms of service, which Musk disagrees with.

“If it’s a gray area, I would say let the tweet exist,” Musk stated in an article posted by NBC News. 

This could lead to an event similar to the 2020 Facebook advertising boycott, where thousands of companies attempted to hold Facebook accountable for misinformation and hate speech on the platform. 

Musk’s idea for a no-boundary platform has some on edge, with the possibility of an increase in bullying, misinformation, and harassment on Twitter. 

At the same time, legal lines are blurred when it comes to free speech online since other countries do not abide by the First Amendment of the U.S. Consitution. 

Overall, the main focus is now on Twitter and how they will respond to Musk’s offer. 

Twitter’s Response: 

In response to Musk’s attempt at a hostile takeover, Twitter enacted a “poison pill” provision that was outlined in its press release on April 15. 

This raises a new question, what is a “poison pill”? In simple terms, the provision’s main goal is to make it extremely difficult for Musk to obtain full control of Twitter.

“The Rights Plan will reduce the likelihood that any entity, person or group gains control of Twitter through open market accumulation without paying all shareholders an appropriate control premium or without providing the Board sufficient time to make informed judgments and take actions that are in the best interests of shareholders,” Twitter stated in its press release. 

The “poison pill” provision is a defense strategy companies use and will come into effect if an investor, such as Musk, acquires more than 15 percent of the company’s shares. 

In this case, this would allow all of the other shareholders, except Musk, to obtain new shares of the company at a less expensive price. This will cause the new shares to dilute the value of all of the shares, ultimately hurting everyone involved, hence the name “poison pill”. 

The provision does not eliminate the possibility of Musk purchasing Twitter but definitely makes it more challenging. 

Musk, despite being the richest man in the world, even admitted in an interview that closing the deal will be very difficult. Many are wondering how he would come up with the large sum of cash needed to close the deal. 

Moving forward, there is no clear answer to what the outcome of this attempted acquisition will be. Everyone will have to wait and see what happens next.