How Elon Musk hurt Twitter and left it worse
SAN FRANCISCO – For years, Twitter was a second-to-none social media company. It hasn’t evolved to the size and scope of Facebook or Instagram. It’s simply muddled along.
Then Elon Musk, a power user of the service, stormed a $44 billion offer to buy Twitter and announced that the company could do much better if he were in charge. He has belittled Twitter executives, mocked content policies, complained about the product and confused more than 7,000 employees with his comments. When Mr. Musk revealed the company’s lack of business and financial prospects, Twitter’s stock fell more than 30 percent.
Now, as billionaire Mr. Musk tries to back off the mega-deal, he’s relentlessly leaving Twitter worse than when he said he was going to buy it. With each annoying tweet and public mockery, Mr. Musk has eroded trust in the social media company, hampered employee morale, upset potential advertisers, underscored his financial hardships and spread misinformation about how Twitter works.
“His involvement with Twitter has made a huge impact on the company,” said Jason Goldman, a member of Twitter’s founding team who also served on its board. “Employees, advertisers and the market in general cannot have conviction in a company whose path is unknown and which will now go to court to complete a deal with a bad faith representative.”
The precarious situation highlights why Twitter is preparing to sue Mr. Musk as soon as this week to force the deal to go through. The court battle will likely be protracted and formidable, and will involve months of costly litigation and high-stakes negotiations by elite lawyers. The solution is uncertain – Twitter may win, but if it loses, Mr. Musk can walk away by paying the breakup fee. Or the two sides can renegotiate or compromise.
On Monday, the damage done by Mr. Musk, 51, was evident. Twitter’s stock is down more than 11 percent to one of its lowest points since 2020 as investors anticipate the upcoming legal battle. Since Twitter accepted Musk’s takeover offer on April 25, its stock has lost more than a third of its value Investors are increasingly skeptical that the deal will go through on the agreed terms. (In contrast, the tech-heavy Nasdaq has fallen about 12.5 percent in the same period.)
Twitter declined to comment on Monday. In a letter to Mr Musk’s lawyers on Sunday, the company’s lawyers said his move to terminate the deal was “null and wrong” and that Mr Musk had “knowingly, willfully, willfully and materially violated” his agreement to buy the company. The letter added that Twitter will continue to provide information to Mr. Musk and work to close the deal.
Mr. Musk did not respond to requests for comment. On Sunday, the billionaire, who cited the number of fake accounts on the Twitter platform as the reason he couldn’t buy the company, tweeted a picture of himself laughing at the situation.
Of all the wreckage Mr. Musk leaves on Twitter, the most notable may be how brutal he has exposed the company’s dwindling financial and business prospects. Twitter has operated at a loss for seven of the nine years it has been a public company. During deliberations about Mr. Musk’s offer, the company did not receive any serious interest from other suitors, people familiar with the situation said. Twitter’s board decided that Mr. Musk’s offer of $54.20 per share was the best it could get, indicating that it doesn’t see a way to get to that price on its own.
“The board’s lack of conviction in the company’s long-term future will remain with employees, partners and shareholders regardless of the outcome with Elon,” said Mr. Goldman.
In recent months, Twitter’s business has deteriorated. Parag Agrawal, Twitter’s chief executive, said in a note to employees in May that the company had not adhered to its business and financial goals. To address these issues, he fired 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 offering a financial outlook to investors, pending an acquisition.
This trajectory is unlikely to change as uncertainty about the deal irritates advertisers, Twitter’s main source of revenue.
“Twitter will have trouble in the near future in assuring volatile advertisers and their users that they will be stable,” said Angelo Carusone, president of monitoring group Media Matters for America.
In what was an implied research on Twitter’s top executives, Musk said he could have done a better job with the company. In a presentation to investors in May, he said he plans to fivefold the company’s revenue to $26.4 billion by 2028 and reach 931 million users in the same year, up from 217 million at the end of last year.
Mr. Musk emphasized Twitter’s sloppy financial direction in a letter filed with the Securities and Exchange Commission on Friday. His lawyers wrote that the “declining business prospects and financial outlook for the company” put him on pause, particularly given Twitter’s “recent financial performance and revised outlook” for the upcoming fiscal year.
Mr. Musk, who has more than 100 million followers on Twitter, hit on the product, saying it’s not as attractive as other apps. He has repeatedly claimed, without evidence, that Twitter has been overrun with more non-authentic accounts than it has disclosed; Such accounts can be automated to pump out toxic or false content. (The company said less than 5 percent of the accounts on its platform are fake.)
His retaliatory criticism about fake accounts has eroded trust in Twitter, experts on disinformation said, as the company prepares to moderate heated political debates about upcoming elections in Brazil and this fall’s midterm elections in the United States.
In another criticism of Twitter and the way it moderates content, Mr. Musk vowed to roll back the company’s moderation policies in the name of free speech. In May, he said he would work to “unblock” former President Donald J. Trump from Twitter, allowing Mr. Trump to return to the social network. That angered right-wing users, who have long accused the company of censoring them, and renewed their questions about how Twitter handled debates about the limits of free speech.
Within the company, employee morale has taken a hit, leading to infighting and attrition, according to six current and former employees.
Some who stayed said they were relieved that Mr. Musk appears to have decided not to own the company. Others have shared nihilistic memes on the company’s Slack or publicly Criticize The Twitter board and executives entertained Musk’s show in the first place, according to internal messages seen by The New York Times. Two people familiar with their thinking said the mood among executives was bleak.
Evan Williams, founder of Twitter, tweeted Friday that he wishes an end to Mr. Musk’s antics.
“If I’m still a board member, I’ll ask if we can just let this whole ugly loop go off,” Williams wrote in response to the announcement that Twitter intends to sue Mr Musk and force the deal to go ahead. “I hope that’s the plan and that’s the celebration.”
Manu Cornet, Twitter employee, clear mood With a cartoon showing a wrecked company being bumped off the shelf by Mr. Musk’s careless elbow. His caption: “You break it, you buy it!”
Ryan Mac And the Isabella Simonetti Contribute to the preparation of reports.