Prologue

I have never liked Twitter (TWTR.NYSE). Judging by the social media platform’s Monthly Active Users (MAUs), I think it’s safe to say that many people feel the same way. According to Buffer, a marketing tools provider, Twitter ranked No. 15 on a list of 20 social media sites ranked by their MAUs. To my surprise, Facebook ranked No. 1, with 2.9 billion MAUs, significantly overshadowing Twitter’s 436 million MAUs.

Personal bias aside, Twitter isn’t necessarily a bad platform. However, Facebook, which has since been rebranded to Meta, is supposedly the most popular social media network for men and women aged 35-44. While I may only be 25, Facebook holds a special place in my heart, as I imagine it does for most older millennials. This is likely due to the fact that Facebook.com officially launched in February 2004.

At this time, I was still struggling to form a coherent thought in my small brain. However, the older generation of millennials was able to experience Facebook’s very origin to the fullest. With this in mind, I can understand why Facebook continues to outperform other popular social media platforms. A combination of nostalgia and accessibility are arguably two of Facebook’s most appealing features.

 

Facebook was created during a time when the concept of “social media” was still in its infancy. That being said, the platform’s user interface (UI) embodied simplicity, allowing people of all ages to pick it up with relative ease. Don’t get me wrong, it was still pretty jank. Even at present, I think there are plenty of superior social media platforms to Facebook.

Yet, having used Facebook since February 2010, the platform has become a staple of my social media rotation. On the other hand, through the use of features like hashtags, Twitter has secured its spot as one of the most popular platforms for following trending news, celebrities, and social issues. With this in mind, Twitter is most popular amongst ADHD-ridden millennials, myself included.

According to Pew Research, one-in-five adult Twitter users under the age of 30 said they visit the platform daily, multiple times a day. I’ll admit, I am part of this demographic. Here’s where things get interesting. Supposedly 25% of US adult Twitter users account for 97% of all tweets in the US. However, Elon Musk recently claimed that Twitter is 20% fake accounts, a stark contrast to Twitter’s claim of just 5%.

Chapter 1: Lust

So begins the tumultuous tale of Twitter and Elon. On April 25, 2022, Twitter announced that it had entered into a definitive agreement to be acquired by Elon for $54.20 per share in cash. In total, this transaction is valued at an estimated $44 billion, which isn’t exactly chump change for most people. While Elon’s proposed acquisition appears to be socially motivated, I am sure the dollar signs help.

“I want to make Twitter better than ever by enhancing the product with new features, making the algorithms open source to increase trust, defeating the spambots, and authenticating all humans. Twitter has tremendous potential – I look forward to working with the company and the community of users to unlock it,” said Elon, CEO and Founder of Tesla.

In 2021, Twitter’s annual revenue growth was 37% year-over-year (YOY), reaching a total of $5.08 billion. Furthermore, the company achieved an average monetizable daily active users (mDAUs) growth of 13% to 217 million in Q4 2021. Looking forward, Twitter intends to have 315 million mDAUs by the end of 2023, which is expected to at least double the company’s annual revenue to $7.5 billion compared to $3.7 billion in 2020. With this in mind, Twitter is an attractive acquisition for Musk in more ways than one.

According to Twitter’s Q1 2022 financial results released on April 28, 2022, the company’s Q1 revenue totaled $1.20 billion, representing an increase of 16% YOY. In particular, Twitter’s advertising revenue totaled $1.11 billion, an increase of 23%. However, the company’s subscriptions and other revenue fell, totaling $94 million, or a decrease of 31% YOY.

The transaction itself was unanimously approved by the Twitter Board of Directors and is expected to close at some point in 2022. To date, Elon has secured $25.5 billion of fully committed debt and margin loan financing and is providing approximately $21.0 billion equity commitment. Following the completion of the transaction, Twitter will become a privately held company. After all, why would Elon want to share his newlywed? For a complete look at Twitter’s Q1 2022 financial results, click here.

Chapter 2: Commitment

Elon’s love story began on April 4, 2022, after he announced the purchase of a 9.2% stake in Twitter, making him the largest external shareholder in the company’s stock. To be more precise, Elon owns 73,486,938 shares of Twitter, which is worth approximately $2.89 billion, according to Twitter’s SEC 13G filing. Although Elon’s ownership was classified as a passive stake, Twitter’s shares climbed over 27% following the news.

In a love confession straight out of The Office, Elon sold 9.6 million shares of Tesla Inc. (TSLA.Q) worth $8.5 billion on April 29, 2022, to fund part of his acquisition of Twitter. Following the news, Tesla’s share price dropped a staggering 12%, representing the company’s second-worst daily decline, right next to a 21% loss in September 2020 after the company failed to make it into the Standard & Poor’s 500 (S&P’s) index.

Breaking News: On May 18, 2022, it was announced that Tesla has been removed from the S&P 500 ESG Index. As defined by the S&P, the S&P 500 ESG Index is a broad-based, market-cap weighted index designed to measure the performance of securities meeting sustainability criteria. To summarize, Tesla has been removed due to racial discrimination claims against the company and its handling of a government investigation associated with crashes linked to the company’s autopilot vehicles.

Exxon is rated top ten best in world for environment, social & governance (ESG) by S&P 500, while Tesla didn’t make the list!

ESG is a scam. It has been weaponized by phony social justice warriors.

— Elon Musk (@elonmusk) May 18, 2022

To provide some background, ExxonMobil is widely recognized for lobbying, advertising, and grant-making with the purpose of delaying acceptance and action against global warming. The company is known for undermining the scientific consensus that global warming is caused by the burning of fossil fuels. In fact, Exxon assisted in the formation of the Global Climate Coalition, whereby businesses oppose the regulation of greenhouse gas (GHG) emissions. I can see why Elon is pissed. 

As previously mentioned, Elon has secured $25.5 billion in funding through two debt commitment letters from Morgan Stanley Senior Funding. With this in mind, Elon intends to fund the remaining $21 billion equity commitment on his own. As it stands, Elon’s net worth is approximately $222 billion, according to Bloomberg. In terms of ownership, Elon is still Tesla’s largest shareholder with a stake of 15.6%. Elon also holds a 43.6% stake in SpaceX, a private company valued at $125 billion.

Chapter 3: Resentment

 

Elon’s first lover’s quarrel with Twitter began on May 13, 2022, when he announced he would be putting his acquisition of Twitter on hold until he sees more information related to the prevalence of spam accounts on the social media platform. As referenced earlier, Elon claims that Twitter is composed of 20% fake accounts, while Twitter’s estimate sits at just 5%. So, who is telling the truth in this situation?

I couldn’t tell you, however, Elon is calling upon the Securities and Exchange Commission (SEC) to investigate Twitter’s claim that less than 5% of its daily users are spam and bot accounts. In the face of Elon’s fury, Twitter has stated that it is committed to completing the transaction at the agreed price. With this in mind, if Elon decides to back out, he will face a $1 billion breakup fee, plus the risk of legal expenses as a result of a breach-of-contract lawsuit.

I wish all breakups were this lucrative. Amidst Elon’s outburst, Parag Agrawal, Twitter’s CEO, released a series of tweets claiming that “externally, it’s not even possible to know which accounts are counted as mDAUs on any given day.” In response to Mr. Agrawal, Elon responded with a poop emoji, followed by the question, “so how do advertisers know what they’re getting for their money.”

To find out, my team will do a random sample of 100 followers of @twitter.

I invite others to repeat the same process and see what they discover …

— Elon Musk (@elonmusk) May 14, 2022

In addition to asking the SEC to investigate Twitter’s claim, Elon has stated that his team will do their own analysis. More specifically, Elon and his team will do a random sample of 100 followers of the @Twitter account. In Elon’s defense, Twitter has previously overstated the number of users on its platform by 1.4 million to 1.9 million over the past 3 years. Still, while Elon’s dedication is admirable, some experts believe this sample is a far cry from due diligence for an acquisition of this size.

This includes Carl T. Bergstrom, a professor at the University of Washington. Dr. Bergstrom loves his data, so much so that he published “Calling Bullshit: The Art of Skepticism in a Data-Driven World.” To summarize, the book is intended to provide tools to see through some of the most intimidating and misleading data. However, it should be noted that Dr. Bergstrom has never really been a fan of Elon to begin with.

Either way, Elon’s feud with Twitter is entertaining, to say the least. As for me, I am just going to kick back and watch this disaster unfold from the comfort of my keyboard. If Elon’s acquisition of Twitter is completed, I am interested to see if the billionaire philanthropist will truly make changes to the platform in an effort to promote free speech.

Twitter’s share price opened at $37.42 today, down from a previous close of $38.32. The Company’s shares were down -1.46% and were trading at $36.86 as of 3:59 PM EST.