Elon Musk wants to shake up Twitter.
The social-media platform’s largest shareholder disclosed a bid on Thursday to buy the remainder of the San Francisco–based company’s stock that he doesn’t already own so he can transform it into the world’s “platform for free speech.” His bid values the social-media company at more than $43 billion. Shares of Twitter TWTR, -1.68% rose Thursday following the news.
Musk is leveraging serious pressure on the company’s management. He indicates that if his “best and final” bid of $54.20 for each Twitter share he doesn’t already own isn’t accepted, he might sell off his stake. His offer represents an 18.2% premium to Wednesday’s closing price of $45.85. “Twitter has extraordinary potential,” Musk said. “I will unlock it.”
On Friday, Twitter said it has adopted a shareholder rights plan, or “poison pill,” that will reduce the chances that a person or group will take control. “Under the Rights Plan, the rights will become exercisable if an entity, person or group acquires beneficial ownership of 15% or more of Twitter’s outstanding common stock in a transaction not approved by the Board,” the announcement said.
He may have his work cut out for him, if he is successful in his bid for the company. Twitter has challenges that go beyond whether or not the platform should have an edit button, or if the company’s management should reinstate former U.S. President Donald Trump under the banner of “free speech,” as some conservative commentators have called for.
Twitter has a user problem, data suggest, but that has little do with Elon Musk. Twitter had 217 million monetizable daily active users (mDAUs) in the fourth quarter of 2021 (with 38 million in the U.S.), up from 211 million in the third quarter. However, analysts tracked by FactSet were expecting the platform to add 8 million mDAUs in the quarter. Compare that to Meta-owned FB, -2.24% Facebook’s 1.9 billion-plus daily active users.
There are signs of stagnation among Twitter’s users. A 2021 study by the Pew Research Center found that the respective shares of Americans who say they use Instagram, Pinterest PINS, -3.44%, LinkedIn, Snapchat SNAP, -4.30%, Twitter and WhatsApp “are statistically unchanged since 2019.”
“This represents a broader trend that extends beyond the past two years in which the rapid adoption of most of these sites and apps seen in the last decade has slowed,” Pew noted. (2021 was the first year Pew asked about TikTok, and the first time it surveyed people about Nextdoor.)
Still, Twitter Chief Financial Officer Ned Segal said on a recent earnings call that he expects user growth to accelerate in 2022. “These expectations are informed by the data that we see, which has been driven by our work to help people successfully create new accounts and reactivate existing accounts,” he said in February. (The company was not immediately available for comment on its user numbers.)
“Twitter has challenges that go beyond whether or not the platform should have an edit button. ”
There’s also the not insignificant issue about how many of those accounts are fake and/or anonymous, spreading fake news and potentially creating a toxic environment on the platform that muddies the original stated goal of social-media companies to elevate free speech, and create a more democratic and accessible way for people without a media platform to communicate.
The company has committed to sweeping efforts to eliminate fake accounts in recent years, but it’s a persistent problem that won’t go away anytime soon. FRANCE 24 recently flagged “suspicious” Twitter accounts that claim to be run by journalists on the frontlines in Ukraine. Last year, Twitter acknowledged that it actually verified several fake accounts.
An in-depth survey of U.S. adults who use Twitter conducted by the Pew Research Center last year found that “a minority of Twitter users produce a majority of tweets from U.S. adults, and the most active tweeters are less likely to view the tone or civility of discussions as a major problem on the site.”
In fact, an analysis of tweets by a representative sample of 2,548 U.S. adult Twitter users last year found that the most active 25% of U.S. adults on Twitter by tweet volume produced 97% of all tweets from these users. High-volume tweeters have more overtly political motivation, and say the site helps them become even more politically engaged.
The most active users are also less likely to regard the interactions as uncivil — an ongoing issue that leads some users to cancel their accounts — and, although they produce the vast majority of content, “highly active tweeters produce relatively few original tweets and receive little engagement from the broader Twitter audience,” Pew found. More than half (58%) of these users say they visit the site daily.
More broadly, 70% of U.S. adults say they visit Facebook daily, a separate Pew report found, a higher rate than Snapchat SNAP, -4.30% (59%), Instagram (59%), Google-owned GOOGL, -2.44% YouTube (54%) and Twitter (46%). “While there has been much written about Americans’ changing relationship with Facebook, its users remain quite active on the platform,” it concluded.
Younger users are key to growth, and Twitter appears to lag in that area, according to Pew. “Majorities of 18- to 29-year-olds say they use Instagram or Snapchat and about half say they use TikTok, with those on the younger end of this cohort – ages 18 to 24 – being especially likely to report using Instagram (76%), Snapchat (75%) or TikTok (55%),” Pew found. Just 42% of that age group said they used Twitter.