The Elon Musk Twitter deal has become a reality. And with it trading on Twitter stock has been suspended from October 28, according to the New York Stock Exchange’s website.
Musk has previously hinted that he intends to revamp Twitter’s rules on content moderation and reinstate banned accounts. It is also rumored that he will fire a majority of the workforce, before hiring thousands of new employees. After taking charge, Elon Musk immediately fired the CEO, CFO, and general counsel.
Musk takes on Twitter Ownership
As Twitter ownership changes hands, stakeholders are expecting to see a 180-degree change in company values and how it operates.
Previously, Musk has referred to Twitter as “the de facto public town square,” which must not be moderated so heavily. He has expressed his desire to grow Twitter into a place where healthy debates can be held.
As the social media site is laden with debt, Musk plans to bring in revenue through multiple sources, including good advertising.
Twitter Goes Private
When the takeover of the social media company was underway, Musk changed his Twitter bio to “Chief Twit”. Earlier, he had tried to wash his hands off the deal but the Twitter trial prevented his escape.
Twitter’s shareholders might end up having to pay capital gains tax as if they had sold the stock, as Musk takes the company private. The amount will depend on how long they have owned the stock.
One of the reasons Musk wanted to take Twitter private is for greater freedom to shape the micro-blogging site according to his vision. As the publicly-traded company goes private, investors will buy Twitter stock at a premium. The company is also delisted from the stock exchange. As of Friday, Twitter shares have been suspended for trading.
If you are a Twitter shareholder, you will receive $54.20 per share in the next few weeks, and then a capital gains tax bill next April, if your holdings are in a taxable brokerage account.
Twitter shares will be delisted from the New York Stock exchange on November 8.
Analysts also mentioned that Twitter will now have less liability from the SEC and shareholders. As quarterly meetings and earnings reports are not mandatory, Twitter will have a greater bandwidth to make long-term decisions on profitability and growth. One drawback is that real-time feedback on strategies will be delayed as analyst meetings are no longer compulsory.
Furthermore, equity holders cannot sell their Twitter shares in the open market. In case they decide to part with their stake, they must find institutional investors.
Changing Twitter, One Tweet at a time
Musk has been vocal about his disapproval of Twitter’s dependency on advertising for revenue. The Elon Musk Twitter deal will give him greater control on revenues as he steers the company towards a subscription-based model. He also intends to cut down on advertisements and be transparent about the site’s algorithms.
Content moderation will see a major change under Musk, who believes that Twitter must do more to promote free speech. As the mid-term elections for the US are scheduled for November 8, it could impact the discourse around governance. In the past, the billionaire has said that he wants Twitter to be perceived as a platform that promotes free speech, and the reality must match it. In lieu of this, he also promised to remove the ban on former US President Donald Trump.
Twitter’s content moderation policies have strict rules around violence, hate-speech, and online harassment. A “freer” environment could mean trouble as it can encourage such discourse to go up while scaring away certain advertisers and influencers. This could have a severely negative impact as Twitter continues to bleed daily active users.
Major questions remain on how the tech company will be monetized as the market faces one of the worst economic conditions in four decades.
