A crowded race. Apollo Global Management Inc., an alternative investment firm, signals interest in helping to finance Elon Musk’s $43 billion offer to take Twitter private. Apollo’s move comes as private equity firm Thoma Bravo LP considers its own offer to buy Twitter.
“Twitter shares posted their biggest gain in two weeks on Monday after the social media company launched a poison pill defense to thwart Musk’s bid to take the company private at $54.20 a share.” [Bloomberg]
Put some spin on it. The quote from Bloomberg above implies that Twitter’s price gain is the result of launching its poison pill defense. However, most of the jump in price, from $39.31 to $50.98, came in the 24 hours after Elon Musk announced his offer to take Twitter private.
In the days since the ‘Elon runup,’ $TWTR has traded sideways. The stock traded at $48.47 in the pre-market hours on Tuesday.
The root of the problem. Jack Dorsey has chosen his moment to cast doubt on Twitter’s board with this cryptic-yet-not-that-cryptic response:
Let’s zoom out a bit. Twitter is a publicly-traded company, and there is this notion I’ve heard around Twitter and sometimes alluded to in the press, which essentially says that Twitter is difficult, if not impossible, to control—and that Twitter is as stable as it’s going to get in its current form.
We may be reaching the limits of what a primarily institutionally-owned public company structure can do for a social media platform.
Taking a broad look at the current state of social media, the story goes that dysfunctions of the modern social media apparatus are due to the scale of the platforms or some outside force like the state of politics in the U.S.
But the real issue may be hidden in plain sight. We are witnessing social media companies become the new Fortune 50. What were once small startups developing new technology are now massive multinational corporations on the scale of Exxon, GE, and Boeing. Investors pile into FAANG stocks (including $TWTR) via massive institutions like Vanguard, Morgan Stanley, Blackrock, State Street, etc.
These large institutions may have protected a dysfunctional board at Twitter over the years—if you listen to the implications of Jack Dorsey. Viewing the problem through this lens also puts the high CEO turnover into context. But Jack has had the longest combined tenure. He was there at the founding, and he was still there only a few months ago. I’m inclined to listen to his assessment of Twitter’s woes.
Will Elon save the company? Elon Musk has become a kind of institution in his own right. The difference between the passive control offered by the public markets and the active control of someone like Musk—is that Musk is an operator. He currently operates massive, industry-disrupting companies producing cutting-edge technology.
It may be too late to save Twitter, but the path forward with Elon Musk would seem to give the platform its best chance to survive.
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