Elon Musk may be on a mission to change Twitter from within

Elon Musk's previous engagement with Twitter has included some of the social media platform's most controversial outbursts. In 2019, he kicked off a defamation case with his "pedo guy" tweet about Vernon Unsworth. The British diver had famously rescued 12 Thai schoolboys trapped in a cave, spurning a small submarine contributed by Musk. On CNN, Unsworth said the tech billionaire could "stick his submarine where it hurts," which evidently upset Musk.

A year later, a Musk tweet that said "Tesla stock price too high imo" wiped $14 billion off his car company's stock-market value. Tesla had previously been fined $20 million for Musk's unwarranted social media commentary. Though he may appear quietly spoken and unassuming in interviews, Musk is also clearly a notorious tweetaholic who can destroy reputations and unleash financial havoc with just a few words. Even Donald Trump struggled to measure up before Twitter eventually banned him.

No ban seems likely in Musk's case, though. A filing with the US Securities and Exchange Commission today shows he has bought a 9.2% stake in Twitter, or about 73,486,938 shares, making him its largest single shareholder. Last Friday, that stake would have been valued at roughly $2.9 billion. With the stock up 30% on Monday at the time of writing, it is currently worth more than $3.7 billion.

So far, Musk has not spoken publicly about his reasons for buying shares, but media speculation is unsurprisingly rampant. A popular theory is that he will not remain a "passive" investor, instead using the 9.2% stake as a springboard to a more active role. Quoted by various mainstream outlets, Dan Ives, an analyst at Wedbush Securities, said he sees the move as "just the start of broader conversations with the Twitter board/management that could ultimately lead to an active stake."

Loss of value

Before last week, Twitter's share price had been on a downward slope since February 2021, when it peaked at $77.06. Even after today's boost, it is worth only about two-thirds as much. The decline in value – along with that of other tech stocks – is probably linked to the world's emergence from the COVID-19 pandemic and attendant lockdowns. The "new normal" of tweeting from bed and making Zoom calls in pajama pants is turning out to be the short-lived normal. Offices, bars and gyms are filling up as many people choose to spend less time online.

Not that anyone would know it from examining Twitter's last set of annual results. Sales at the company soared to nearly $5.1 billion, from about $3.7 billion in 2020. Its number of "monetizable" daily active users hit about 217 million in December, up from 192 million a year earlier. Less the town square of the social media world than a raucous nightclub where drunken fights are hard to avoid, Twitter can still pack in the crowds.

Unfortunately, Twitter racked up losses of nearly $1.4 billion for the recent two fiscal years and has reported a net profit in only two of the last ten. Over that entire period, its losses amount to nearly $1.1 billion. In 2021, it paid out $809.5 million to settle a class-action lawsuit over charges it provided misleading information to investors about user engagement.

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Musk is perhaps motivated by considerations that are not strictly financial. He spoke convincingly at Mobile World Congress last year about wanting to "maximize the probability the future is good" and pursues science projects that would scare off many investors. There are easier ways to make money than by funding a mission to Mars.

Just days before buying shares in Twitter, Musk used its platform to question the company's attitude toward free speech, drawing on the town square analogy. "Given that Twitter serves as the de facto public town square, failing to adhere to free speech principles fundamentally undermines democracy," he tweeted. "Is a new platform needed?"

Overly zealous

Twitter is among several Big Tech firms that have taken what critics see as an overly zealous approach to Internet censorship. As the town square analogy indicates, the social media giants are not ordinary companies but major global platforms for speech and debate in the online era. No doubt, the decisions by Facebook and Twitter to ban Donald Trump were applauded by millions who thought him unfit to be a US president. Yet they effectively meant a few unelected billionaires were assuming the power to silence a democratically chosen leader.

Others have been unimpressed by social media's intervention on stories about COVID-19. Until May last year, Facebook's policy was to remove posts suggesting the virus leaked from a Wuhan laboratory, rather than jumping from animals to people at a nearby market. That policy seemed to change only when Joe Biden ordered an investigation into COVID-19's origins. The lab leak is now considered a plausible theory, but Facebook previously censored it as "misinformation."

While an uncensored platform evidently appeals to Musk, building a site from scratch would be harder than changing one that already exists. If change is Musk's intention, it could set him on a clash with Parag Agrawal, who succeeded Twitter founder Jack Dorsey as CEO in November.

On friendly terms with Dorsey, Musk showed the Twitterati what he thinks of Agrawal in a meme he tweeted in December. The original photo shows Joseph Stalin alongside Nikolai Yezhov, a Soviet official executed on Stalin's orders in 1940. In Musk's doctored version, Stalin's face has been replaced with Agrawal's, and Yezhov has become Dorsey.

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— Iain Morris, International Editor, Light Reading