The company’s most outspoken critic (and new majority shareholder) could shake up the platform — and not just with that edit feature
Now that Elon Musk has emerged as Twitter’s biggest shareholder and newest board member, the social platform is poised for some major changes ahead — from its product strategy to growth and innovation at the company level.
While the Tesla boss has yet to reveal specific plans for the San Francisco-based social media giant, he has been vocal about how he would improve the social network — particularly when it comes to content moderation. Musk has been engaging with his millions of Twitter followers discussing specific features, from the highly requested edit feature for posts to cracking down on crypto scams.
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And Musk’s move — acquiring 9.2% of the company (and agreeing to limit his stake to less than 15%) — has been well received on Wall Street so far, with shares of Twitter jumping more than 27% at market close on Monday and staying steady through Tuesday.
One reason is that Twitter’s share price has lagged behind that of other social media giants. Twitter’s “market value pales in comparison to the impact it has on all of our lives,” Peter Csathy, chairman of CREATV Media, told TheWrap. “We know it. Elon knows it, and now he is acting on it.”
Twitter may benefit from having a serial tech entrepreneur like Musk on its board. From making cars to blasting into outer space, Musk has used his wealth to take over Tesla after investing in the car company back in 2004. He also founded the space services company SpaceX.
“It’s a classic Musk move,” Csathy said of the entrepreneur’s Twitter investment. “He has demonstrated time and time again that he can summon legions of primarily fanboys with a drop of a tweet on any topic of his choosing.”
And lately, Twitter leadership has been disrupted by the exit of founder and CEO Jack Dorsey last year. The platform has struggled with product development that will take it into the next phase of growth. The company has a goal of hitting 315 million daily users and more than $7.5 billion in revenue in 2023 — but it has been slow to respond to consumer demand for features like an edit button (which the company announced Tuesday, just two years after Dorsey proclaimed the company would “probably never do it”).
“This could be a sign of change for Twitter, a platform that has held the mantle of a place where conversation happens online, but also has lacked innovation recently,” Flynn Zaiger, CEO of Online Optimism, said.
Representatives for Twitter didn’t respond to TheWrap’s request for comment on this story.
For now, experts agree that Musk’s investment is sure to shake things up for Twitter. How much and how quickly remains to be seen, and as Zaiger pointed out, Musk may very well be the biggest shareholder — but that doesn’t mean he has carte blanche decision-making power. “He can’t make changes to the platform at whim,” Zaiger said. “However, in a crowded boardroom meeting, he will have the largest voice.”
Let’s take a look at a few ways Musk can ultimately shape Twitter and the social media landscape.
1. Musk could influence Twitter’s content moderation approach.
Twitter may start to see its free speech and content moderation policies come into even greater focus as Musk gets more involved. The billionaire has been a major critic of Twitter’s censorship politices, especially in this last month, blasting the platform for not defending free speech and, in his words, “undermining democracy.” It’s clear that he finds the platform fails to uphold its free speech policies.
In a poll in March, Musk asked Twitter users whether the platform “rigorously adheres” to free speech principles, and 70% of more than 2 million users responded, “No.”
But the ongoing debate around this First Amendment issue doesn’t just involve Twitter. It calls into question the larger content moderation approach on all the major social networks, from Facebook to TikTok to Donald Trump’s Truth Social, which has already faced criticism for flagging posts for violating its terms of service. How much should these tech companies ultimately regulate our free speech?
By investing nearly $3 billion in Twitter, Musk is able to assert influence on a major social network and perhaps influence its content moderation. Some conservatives believe Musk’s 9.2% stake in Twitter could be a chance for Twitter to embrace its free speech roots.
“Elon Musk becoming Twitter’s largest shareholder is great news for social media,” Mark Weinstein, founder of the alt-tech social media and social networking service MeWe, which has become a home for many conservatives, anti-vaxxers and conspiracy theorists. “Musk’s desire to eliminate onerous algorithmic targeting and paid propaganda is important for the world.”
Making a play for Twitter is also a way for Musk to seek control over a platform that he believes has too much control over his own speech.
“With this move, Musk is not just doing an instant cash grab,” Csathy said. “He is likely testing the waters for an outright full acquisition to make Twitter his very own personal megaphone, much like The Washington Post is for Jeff Bezos.”
2. Musk could push Twitter to grow its overall business and drive competition.
Adding Musk’s financial investment and obsession with innovation could be good for Twitter’s business in several ways. Since Musk took over as Tesla’s CEO (or Technoking, as he preferred), the company’s stock has exploded — and grew more than 58% in the last year (compared to Amazon’s for example, the company’s stock price has shot up more than 58%, compared to the more modest 4% increase for Amazon shares or the 30% drop for Netflix stock.)
Twitter has remained a pretty small player in social media when you look at the numbers. The platform has seen some growth in user base — growing average monetizable daily active users in the fourth quarter of 2021 to 217 million users — and reported $5 billion in annual revenue. But it’s still short of the 2023 goal of 315 million daily users and more than $7.5 billion in revenue. In comparison, Facebook, while starting to shrink, boasts 1.9 billion daily users and generates a massive $118 billion in revenue.
One short-term change would be shaking up the board and “possibly a shift in product strategy,” Mandeep Singh, analyst at Bloomberg Intelligence, told TheWrap. “There’s a good chance of a buyout if the current CEO fails to show daily active user and monetization growth in the next six months.”
Product-wise, the platform has frequently killed new features that didn’t pan out, from the video streaming app Periscope to Fleets, a feature for disappearing tweets. So far, the additions that have stuck are Spaces, a live audio room, and Twitter Blue, the platform’s subscription option aimed at driving monetization.
“Their biggest new functionality recently was Twitter Spaces, pretty clearly copied from Clubhouse,” Zaiger said. “Perhaps Musk’s innovative attitude will be the change that Twitter needs to kickstart their second decade of growth.”
While Musk and the company’s leadership may explore new integrations or revisit old ideas, “don’t expect rapid changes,” Zaiger said. “Anything Musk does will still have to be approved by the rest of the board. Twitter may announce new features soon that Musk will take credit for … but they were likely in development far before Musk’s stock purchase went through.” (Indeed, the company insisted Tuesday that it had been working on its just-announced edit feature since last year: “no, we didn’t get the idea from a poll.”)
Musk’s investment in Twitter also makes it less likely that he will follow through on his recent threat to launch his own social media platform. “Launching any new social network, regardless of founder credentials, is fraught with pitfalls. Truth Social is the perfect example,” Weinstein said, referring to former president Donald Trump’s struggling new app.
A month after a challenging launch period, Truth Social has already seen a 93% decline in signups and a significant drop in traffic. Meanwhile, Facebook and Instagram parent Meta continue to battle fast-growing TikTok over the younger demographic on social media as its apps shrink.
3. Musk could start a bigger investing trend in the billionaire’s club.
A 9% stake in Twitter may not offer Musk as much influence as some suspect. But the SpaceX founder’s move could inspire other activist investors to come on board and push for greater changes at the company.
Twitter is no stranger to the challenges of activist investors. In 2020, hedge fund Elliot Management pushed for platform changes at Twitter, and tried to oust former CEO Jack Dorsey. Dorsey stayed on but left the company last year to focus on his CEO role at the digital payments company Square, now known as Block.
But weight of Musk’s investment “may move the needle,” Iliya Rybchin, partner at consulting firm Elixirr, said, adding that billionaires like Mark Zuckerberg, Warren Buffett and Jeff Bezos could be inspired to make similar activist investment plays.
“At $270 billion, [Musk’s] net worth is comparable to many hedge funds, and a $2.9 billion investment is nothing for him,” Rybchin said. “Will he use his wealth to take meaningful stakes in other companies to drive agendas? It’s easier to buy 10% of Twitter than start a competitor.”
Still, Rybchin cautioned against expecting too much change at Twitter. “The question is whether other investors have interests that align with Musk,” he told TheWrap. “He wants more free speech, most investors just want more profits.”