Why did Elon Musk buy Twitter? It’s a question that many people have been asking since the deal was announced. There are a lot of theories and speculation about Musk’s motivations, but the one thing we know for sure is that the acquisition has had a major impact on the world of social media.
Why Did Elon Musk Buy Twitter?
Elon Musk purchased Twitter this week because he had little choice. The world’s richest man tried for months to back out of the $44 billion purchase agreement he signed in April.
However, the uncertainty was so disruptive to Twitter’s operations that it sued Musk in the Delaware Court of Chancery to force the conclusion of the purchase.
A judge set a deadline for Musk to finish the deal or face a trial that he was sure to lose. As for why Musk wanted to own Twitter in the first place, the reasons are more complicated.
In an open letter, he stated there has been much speculation about why he bought Twitter and what he thinks about advertising. According to him, most of it has been wrong.
How Did Elon Musk Buy Twitter?
Musk has agreed to pay $44 billion to buy the company and take it private, but it is unclear how he will pay for it all. However, a lot of the promises made to the CEO of Tesla were made back in the spring.
Earlier this year, a number of banks, including Morgan Stanley and Bank of America, agreed to provide the $12.5 billion that Musk required in order to purchase Twitter and take it private.
Solid agreements with Musk obligated the banks to the funding, albeit since April, the terms have probably become less appealing due to shifts in the debt markets and the economy.
Billionaires were also anticipated to be contributed by investors who would receive ownership shares in Twitter.
The parties on Musk’s initial list of equity partners ranged from funds run by Middle Eastern aristocracy to the billionaire’s computer industry pals, such as Larry Ellison, who co-founded Oracle, and who had similar views about Twitter’s future.
Following Musk as the company’s largest stakeholder, billionaire Saudi Prince Alwaleed bin Talal announced on Friday that he and his Kingdom Holding Company have rolled over a total of $1.89 billion in outstanding Twitter shares.
The cryptocurrency exchange Binance, a second equity investor, verified on Friday that it had contributed $500 million.
How will Twitter Make Money?
Twitter’s primary revenue stream remains the sale of digital advertising. Twitter produced $US5 billion in revenue prior to Musk’s acquisition of the firm by selling promoted space to businesses that wanted to advertise.
Musk plans to reduce the company’s dependency on advertising, according to a pitch document, with the help of the previously stated subscription revenue and audacious suggestions about growing the user base and charging for video uploads.
The new Twitter owner also said that the company is drafting a plan that will allow Twitter users to make payments through the platform.
With his actions since taking over two weeks ago, he has already alienated several of the company’s advertisers.
He has tweeted that he would “name and shame” businesses that he felt were caving into activist pressure, taking aim at those that have cut back on expenditure.
However, Musk will have to increase income because the interest he pays on the debt he has put upon the company alone amounts to around $1 billion USD annually.
Final Words
Regardless of Musk’s motives, buying Twitter was a big moment for social media and the internet as a whole. Whether you’re a Twitter user or not, this acquisition is likely to have a ripple effect that will be felt for years to come.
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