Twitter and the Chief Twit

[Durzel]

I think everyone would agree that he paid probably 3x as much as Twitter was actually worth, and was going to struggle to service the $1b/year debt interest obligations without anything changing (Twitter had only posted a profit in 2 of the 16 years it had been in business, and had failed to monetise the userbase in all of that time), but I'd never have imagined he would torpedo it as much as he has in the past 10 days or so.

Everything he posts on there at the moment is at best very poorly judged, and at worst maniacal. He is being clowned on by everyone on there, including blue ticked celebrities, and just trying to front it out - and failing badly. If I didn't know any better I'd think he was bipolar, or that there was some ingenuity to his behaviour in so far as unwinding the whole deal - though I don't see how that is possible.

Very strange times, and doesn't really bode well for Tesla both in terms of brand perception and Musk's previously unquestioned halo effect on it. I can't see how anyone can spin setting fire to tens of billions of dollars as being the markings of a savvy, ahead of the curve businessman.

We're definitely through the looking glass now.

EDIT: Mentioning politics risks getting this thread nuked, but yeah - it's bizarre.

 

[Zilla91]

EDIT: Mentioning politics risks getting this thread nuked

Tried my very best to keep it factual/neutral to keep the mods happy

 

[WKUK]

Twitter does not have an engineering problem that Elon can solve. it has a human behaviour and moderation issue that he seem entirely unable to understand, never mind do anything about. He's clearly not wired that way

Hopefully it doesn't drag Tesla into the dumpster fire that seems inevitable now, but I imagine the reigns will be whipped away by shareholders before the asset is put at risk. Tesla future value potential dwarfs Twittter's

 

[Durzel]

Twitter does not have an engineering problem that Elon can solve. it has a human behaviour and moderation issue that he seem entirely unable to understand, never mind do anything about. He's clearly not wired that way

Hopefully it doesn't drag Tesla into the dumpster fire that seems inevitable now, but I imagine the reigns will be whipped away by shareholders before the asset is put at risk. Tesla future value potential dwarfs Twittter's

Indeed. At its heart it is a very simple thing, technically, which is all the more bizarre that he would think it's worth spending $44b on.

The value is pretty much entirely in the userbase, which has never been effectively directly monetised (Twitter Blue was launched in June 2021, 15 years after Twitter launched, and made just $6.4m since then). Advertising was the major income stream, and he's poisoning that well with every tweet he makes lately.

What should concern Elon and his investors is that because there isn't much to Twitter in technical terms it is not inconceivable that it could be supplanted. Anyone who thinks that this is unlikely need only look at MySpace - whose position would have been similarly considered unassailable in its heyday.

Of course we know that the $54.20/share meme price he offered was him having a laugh, but I bet it's not funny now. The best thing he could do I think is accept that he's not the person that should be in charge of it, but I can't see that happening due to ego and hubris.

I can't see how this isn't going to damage Tesla as time goes on. In the best case he's just distracted from it, but I can imagine a world in which the Tesla brand is diminished - since its share price is surely predicated to a greater or lesser extent on the belief (illusion?) that Elon is a visionary. Visionary businessmen don't spend 3x on buying a company and then spook and threaten the entities who are its fundamental revenue stream. If he needs to sell more stock to shore up what's going on at Twitter then it would be affected more directly. A possible shareholder rebellion (e.g. derivative lawsuit or "breach of fidicuary duty" claim) could follow.

 

[Limey]

He posted quotes today from a neo-nazi peado.

Hes showing up how dumb he really is.

 

[WKUK]

He posted quotes today from a neo-nazi peado.

Hes showing up how dumb he really is.

Your "paedo" mention reminds me of this legendary Twitter exchange:

 

[GeorgeSymonds]

It’s very true that the technology is very simple, in a way that’s the advantage of it from a user perspective. I imagine WhatsApp, Telegram, Discord, Messenger and the like are all working out how to bend their platforms to fill the function of broadcast messaging if they can’t do it already. The winner might be the one that offers the best moderation, it we know that’s pretty much an impossible task to please everybody (although I am available for hire )

Anyone remember friends reunited? Yahoo!. There’s plenty of examples of falls from seemingly dominant positions. Littlewoods pools (if you’re old enough to remember). Gerard Ratner could be thinking finally somebody might actually replace him as the text book self destruction case study.

 

[Casss]

The increasing association between all of the Twitter controversies and Tesla as a car company is certainly something.

The real 'rotten foundations' of the Twitter situation at the moment from the perspective of whether it will survive or not (and for how long) is their awful New Fronts 2022 result. All the other disasters are just piled on top.

In typical years, Twitter would sell chunks of ads to upfront buyers in the region of 600-900M USD shoring them up for the following year, or at least meaning they could service debts, pay salaries and remain buoyant.

This year Twitter had no answers or assurances on the whole Musk situation at the event, completely tanked, and spearheaded by a coalition called Stop the Deal, buyers punished them for it. Too risky, concerned about the possibility of public outbursts, law suits, advertising standards concerns, who knows what the individual concerns were but the result was that Twitter came away with virtually NIL in the bag. Musk has chosen to antagonise this group instead of work with them or treat them like a valuable customer base, so Twitter has to find (conservatively) 800M - 1.2B in loan interest payments this year with nothing in the bag as yet.

To people and pundits saying that he's simply looking to monetise a *certain* demographic, and this is all calculated... that's quite the risk. Maybe he will just pass the loans onto Twitter in their entirety, sell it to someone dodgy and jump ship but who knows.

I don't give a rats about Twitter and never have, but I hope it doesn't damage Tesla just for the fact that I want to see them continue making better cars, and not become another Saturn. Also I don't want 1/2 of all my Tesla related conversations to be about Twitter and Twitter outbursts, it's going to get really boring having to clarify that I don't own one because I think the guy is a god.

Edit: I'm seeing lots of complaints online from people who cannot deactivate their account - this could just be a resource allocation issue as they didn't foresee a backlash like this, but could also be a dark pattern. If it's the latter and things get legal, that could be a pretty swift death blow to the platform.

 

[Durzel]

There's no reason to believe that the group that feels disenfranchised by Twitter are going to provide the cash that Twitter is lacking. As you say it's all coming from advertisers, Twitter Blue was launched in the middle of 2021 and has made $6.4m since then, so barely a dent.

As you say Elon has to find ~$1b/year just to service the debt financing, forget about actually breaking even or making a profit (which Twitter has only managed to do in 2 of the 16 years it's been in business).

If he'd paid ~$10b for it I'd say there would be something in there that he can build it back up from. As it is he's paid top, top money, far in excess of what it was worth, and so far his monetisation ideas have been about destroying the credibility of verified accounts (if everyone has a blue tick then they cease to be an authentic source), and not a lot else.

I also agree with you that even if you don't care about Twitter at all - which I don't either, I simply consume it from time to time - the impact on the Tesla brand from Elon's current derangement and distraction can't be good. Like you I don't want to have to be explaining to people that "yes I think he's being a knob as well".

 

[CWT3LR]

I also agree with you that even if you don't care about Twitter at all - which I don't either, I simply consume it from time to time - the impact on the Tesla brand from Elon's current derangement and distraction can't be good. Like you I don't want to have to be explaining to people that "yes I think he's being a knob as well".

Best explanation I have read so far about why anyone interested in Tesla - shareholder, owner or believer in their mission - should be worried about his current derangement.

 

[GeorgeSymonds]

I read an article about the advertising pull back and agencies advising clients to hold fire writing big cheques to Twitter. It got me wondering if the agencies haven’t appreciated having to compete with Musk and his free advertising from viral marketing for other clients. Musk tweets/says something about his cars and it’s all over the internet, if BMW wanted similar coverage it would cost millions. It’s then one thing competing, it’s another thing actually giving the competition some of your marketing budget.

Maybe a conspiracy theory too many (I have had a beer), but perhaps this isn’t just about the free speech, how’s it going to be run side of things, but a personal snub by advertising agencies of the guy who’s bragged about not needed to advertise.

 

[Durzel]

There are reports (and an SEC filing) that he has sold another $4b worth of shares. That’ll cover the debt interest payments for 4 years at least.

 

[Rooster6655]

Musk has owned twitter for free for years without having to deal with the behind the scenes, now he owns it has to pay for it, manage it and deal with all the problems with it!

 

[CWT3LR]

There are reports (and an SEC filing) that he has sold another $4b worth of shares. That’ll cover the debt interest payments for 4 years at least.

Not sure about US taxation on share sales, but a chunk of that might be capital gains tax or similar? And don't forget the Chinese / Saudi backers, who could find a billion a year no problem, in return for taking down all the criticism their regimes face on the cesspool.

 

[2020M3SR]

Seen a funny tweet the other day:

Every time Elon tweets something is like watching Joe Pesci enter the Home Alone house

 

[ACarneiro]

I, for one, couldn’t care less if twitter exploded tomorrow so am watching all this mess with great interest and amusement.
I do worry, however, that it will get replaced by something just as bad or possibly worse…

 

[WKUK]

I read an article about the advertising pull back and agencies advising clients to hold fire writing big cheques to Twitter. It got me wondering if the agencies haven’t appreciated having to compete with Musk and his free advertising from viral marketing for other clients. Musk tweets/says something about his cars and it’s all over the internet, if BMW wanted similar coverage it would cost millions. It’s then one thing competing, it’s another thing actually giving the competition some of your marketing budget.

Maybe a conspiracy theory too many (I have had a beer), but perhaps this isn’t just about the free speech, how’s it going to be run side of things, but a personal snub by advertising agencies of the guy who’s bragged about not needed to advertise.

It's true most of the major agencies are considering their position on Twitter spend right now and Musk has clearly noticed. He is wholly confused about what an advertiser wants. They do not care about "supporting free speech", they care about their brand and their results. The current state of the platform gives them concern for both and they will spend elsewhere until they are reassured. No political motivation beyond these facts. Its not that deep Elon

The automotive ad sector's attitude to Twitter-as-a-sub-brand of Tesla is TBC, but will follow the same rules. 1. is my brand safe on Elon Twitter? 2. Am I driving positive results for my ££?

I suspect there are some technical issues to solve in their ad product architecture and I think the ad market will be watching that closely, but the other stuff is all outside of Elon's core competence. In fact it is right in his blind spot. Their Q4 22 numbers are going to be a an absolute disaster

 

[Durzel]

Musk has owned twitter for free for years without having to deal with the behind the scenes, now he owns it has to pay for it, manage it and deal with all the problems with it!

That's what I don't get. I think he was (and still is?) the most followed person on there. There was a remote chance he could get banned, like Trump, if he said what he actually wanted to say, so maybe he felt he needed to own it to stop that happening?

It's easier to believe that he was just coked up or something and in the same frame of mind as when he said he had offers to take Tesla private for $420/share (another meme price).. i.e. he tweets before thinking.

 

[Tony Hoyle]

I think it was a bit of a meme and his usual 'let's generate some controversy for publicity' thing and it backfired when he was forced to go through with it.

Now he's way out of his depth.. flipping between 'free speech absolutionist' and 'ban everyone that says things elon doesn't like, including advertisers' and 'lets turn twitter into youtube' and whatever else he's come up with before I finish typing this..

If he'd just bought it and turned the whole thing over to a management team with experience in this area, things might have gone a bit better.

(Most followed is Barack Obama, btw.)

 

[Durzel]

Yeah I'd agree with that.

I thought it was a bad idea him buying it, both for him and people generally who use it. It was a very poor decision financially, him having paid at least 3x what Twitter was actually worth based on their loss-making history.

I also happen to think as a business propostion it is a poisoned chalice. It is a pretty toxic place to be on for too long, and definitely very left leaning - but I can also see that advertisers aren't going to touch anything that approaches a "maybe the right have a point about XYZ" forum, so I can see why it would be the way it was.

Never in my wildest dreams would I think that Musk would torpedo it the way he has. I could have easily believed that people would be turned off by his involvement with it, but I imagined he would navigate that by taking a more backseat "grand plan" role. As it is he's alienating everyone and all of his monetisation ideas sound like throwing crap against the wall to see what might stick. Truly bizarre.

He's not doing his cultivated image of genius ahead of his time any favours at all with his antics, if anything I'd say it is probably suggesting to people that his previous successes have been fortuitous. Either way - not good for Tesla.