Search
  • The San Juan Daily Star

How Elon Musk damaged Twitter and left it worse off


The billionaire SpaceX owner and Tesla chief executive Elon Musk.

By Kate Conger and Mike Isaac


For years, Twitter was a runner-up social media company. It never grew to the size and scale of a Facebook or an Instagram. It simply muddled along.


Then, Elon Musk, a power user of the service, stormed in. He offered $44 billion to buy Twitter and declared that the company could perform far better if he were in charge. He disparaged Twitter’s executives, ridiculed its content policies, complained about the product and confused its more than 7,000 employees with his pronouncements. As Musk revealed the company’s lack of business and financial prospects, Twitter’s stock plunged more than 30%.


Now, as Musk, a billionaire, tries to back out of the blockbuster deal, he is inexorably leaving Twitter worse off than it was when he said he would buy it. With each needling tweet and public taunt, Musk has eroded trust in the social media company, walloped employee morale, spooked potential advertisers, emphasized its financial difficulties and spread misinformation about how Twitter operates.


“His engagement with Twitter took a severe toll on the company,” said Jason Goldman, a member of Twitter’s founding team who has also served on its board of directors. “Employees, advertisers and the market at large cannot have conviction in a company whose path is unknowable and which will now go to court to complete a transaction with a bad-faith actor.”


The precarious situation underscores why Twitter is set to sue Musk as soon as this week to force a completion of the deal. The court battle is likely to be protracted and immense, involving months of expensive litigation and high-stakes negotiations by elite lawyers. A resolution is far from certain — Twitter might win, but, if it loses, Musk could walk away by paying a breakup fee. Or the two sides could renegotiate or settle.


On Monday, the damage that Musk, 51, has inflicted was evident. Twitter’s stock plunged more than 11% to one of its lowest points since 2020 as investors anticipated the coming legal battle. Since Twitter accepted Musk’s acquisition offer, on April 25, its stock has lost over one-third of its value as investors have grown increasingly skeptical that the deal would get done on the agreed terms. (In contrast, the tech-heavy Nasdaq index was down about 12.5% in the same period.)


Twitter declined to comment Monday. In a letter to Musk’s lawyers on Sunday, the company’s lawyers said that his move to terminate the deal was “invalid and wrongful” and that Musk “knowingly, intentionally, willfully and materially breached” his agreement to buy the firm. Twitter would continue to provide information to Musk and to work to close the transaction, the letter added.


Musk did not return requests for comment. On Sunday, the billionaire, who has cited the number of fake accounts on Twitter’s platform as the reason that he cannot buy the company, tweeted a picture of himself laughing at the situation.


Of all the wreckage Musk is leaving at Twitter, the most prominent may be how brutally he exposed the company’s waning financial and business prospects. Twitter has operated at a loss for seven of the nine years it has been a public company. During deliberations over Musk’s offer, the company received no serious interest from other suitors, people with knowledge of the situation have said. Twitter’s board determined that Musk’s offer of $54.20 a share was the best it could obtain, suggesting it saw no way to reach that price on its own.


“The board’s lack of conviction in the company’s long-term future will linger over employees, partners and shareholders regardless of the outcome with Elon,” Goldman said.


In recent months, Twitter’s business has deteriorated. Parag Agrawal, Twitter’s CEO, said in a memo to employees in May that the company had not lived up to its business and financial goals. To address the issues, he pushed out the heads of product and revenue, instituted a hiring slowdown and began an effort to attract new users and diversify into e-commerce. In April, the company stopped providing a forward-looking financial outlook to investors, pending the acquisition.


That trajectory is unlikely to change as uncertainty over the deal discomfits advertisers, the main source of Twitter’s revenue.


“Twitter will have trouble in the near future reassuring skittish advertisers and their users that they’re going to be stable,” said Angelo Carusone, president of the watchdog group Media Matters for America.


In what was an implicit dig at Twitter’s top executives, Musk said he could have done way better with the company. In a presentation to investors in May, he said he planned to quintuple the company’s revenue to $26.4 billion by 2028 and to reach 931 million users that same year, up from 217 million at the end of last year.


Musk emphasized Twitter’s rudderless financial direction in a letter filed to the Securities and Exchange Commission on Friday. The company’s “declining business prospects and financial outlook” had given him pause, his lawyers wrote, especially considering Twitter’s recent “financial performance and revised outlook” on the fiscal year ahead.


Musk, who has more than 100 million followers on Twitter, has also jackhammered the product, saying it is not as attractive as other apps. He has repeatedly claimed, without evidence, that Twitter is overrun with more inauthentic accounts than it has disclosed; such accounts can be automated to pump out toxic or false content. (The company has said fewer than 5% of the accounts on its platform are fake.)


Manu Cornet, a Twitter employee, illustrated the mood with a cartoon that showed a shattered company that had been bumped off a shelf by Musk’s careless elbow. His caption: “You break it, you buy it!”


21 views0 comments

Recent Posts

See All

The S&P 500 .SPX fell to its lowest level in almost two years on Tuesday on worries about super aggressive Federal Reserve policy tightening, trading under its old 2022 low from June and leaving inves