For Elon Musk, is life a game? Renowned for making and undoing stock market actions when it suits him, the billionaire, owner of Tesla and Space X, herald of future technological innovations, volcanic and hieratic, has offered himself a new about-face which titillates his admirers but worries analysts financial.
After announcing the takeover for 44 billion of the social network Twitter, the South African businessman withdrew on Friday, May 13, fearing the proliferation of fake accounts on the platform. An announcement that suspends the agreement reached on April 25 and instantly caused the value of the shares of the blue bird to plummet.
Elon Musk says he is waiting for more details on the proportion of fake accounts and to ensure that “spam (…) represents well under 5% of the number of users”. He wants to be reassuring: he still intends to become the owner of the firm. But the suspension of this major investment – in the space of ten days – raises questions while the question of fake accounts on Twitter is not new. Story in five dates of the tormented idyll of the two giants.
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- May 2021: the beginnings of a turnaround
The scene takes place in May 2021, just a year before the announcement of the takeover of Twitter by the South African businessman. Its flagship company Tesla, leader in the electric vehicle market, made a sensational announcement a few months earlier. She bought $1.5 billion worth of bitcoins and now accepts cryptocurrency for payment for her electric cars. A revolution in the world of technology. The price of cryptocurrency has soared. But all it took was one tweet from Elon Musk to melt thousands of wallets and drag the industry into turmoil: Tesla stops accepting bitcoins. The course of the so-called “free” currency lost 20 points in a few days.
This unexpected reversal tells us as much about the unpredictability of the South African leader as about his considerable weight on the financial markets. In June 2021, he implies that he could reconsider his decision and bitcoin resumes color. Elon Musk is accused by specialized firms and analysts of playing with stock market values to lower the price of shares as he pleases. A year later, wouldn’t the suspension of the takeover of Twitter be interpreted in the light of these repeated volte-faces? In any case, this is a hypothesis shared by the investment company Hargreaves Lansdown, quoted by the American economic and financial media Bloomberg: “Forty-three billion seems a gigantic price. His announcement may be a strategy to lower this amount.”
- March 2022: the first step into the Twitter house
March 2022. Fake accounts and bitcoin issues are far behind Elon Musk. He prepares his star wars: a lightning conquest of what he believes to be the most influential social network in the world. In the middle of the month, Elon Musk acquires 9.2% of the capital of the platform and it is only on April 4 that the information is made public.
The billionaire, who waited eleven days to declare his stake on the date provided by law, was able to save nearly 150 million euros. He took advantage of artificially low stock rates. A complaint has been filed by shareholders who see this as a kind of insider trading. In the space of four weeks, the libertarian entrepreneur will manage to gather the financing to acquire the social network where he is followed by more than 83 million people.
- Early April 2022: Elon Musk wants to get his hands on the social network
On April 14, ten days after the revelation of his entry into the capital, Elon Musk presents his desire to fully buy out Twitter, according to a new document filed with the SEC, the American federal body for regulation and control of the financial markets. During a conference where he had been invited for a long time, the richest man in the world details the outlines of his project and specifies the reasons which led him to hatch such an ambition. “Twitter has become, in a way, the public square. So it’s very important that people both have the perception and that it is the reality that they can speak freely within the limits of the law”, he displays, placing himself as the champion of freedom of expression.
The communication operation is run-in. Elon Musk reassures: it is not a question of “making money”, but of committing to a happy future. A new soap opera then begins: how will the entrepreneur finance his project?
If he is considered the richest man in the world, Elon Musk has a fortune that is mainly based on valuation, he has little equity to invest. Nearly half of its Tesla shares are already pledged, meaning they have been placed as collateral with lenders, as part of other buyouts. The room for maneuver is therefore narrow in the eyes of several specialists. He finally manages to set up a hodgepodge of financing based on the following balance: 13 billion in loans from banks, 21 billion in sales of Tesla shares and 12.5 billion “from a loan on margin “, that is to say to “pledge” again part of the shares he has. The outcome of the conquest is only a matter of days.
- End of April 2022: Twitter under its flag
On April 24, Elon Musk takes over one of the most influential social networks in the world. However, the prospect of seeing the South African buy the platform seemed unlikely until then given the recurrence of its sudden changes in strategy, as the events of May 2021 reminded us.
Its takeover proposal was unanimously accepted by Twitter’s board of directors. In total, the billionaire has put nearly 44 billion euros on the table. After long exchanges with the main shareholders who initially viewed with doubt the entry of the tech troublemaker into the game, Elon Musk has established himself as a credible recourse.
On the day of his induction, he did not hide his ambition: to remove Twitter from the stock markets with a view to reforming the company… Among his projects, the regulation of fake accounts which he listed as a priority, to bring down the anonymity and emancipation from the moderation rules that Twitter had ended up following in recent months. “Freedom of expression is the foundation of a functional democracy,” he explained in a press release a few days earlier.
- May 13, 2022: reverse machine
While everything seemed to be going in the direction of Elon Musk, the entrepreneur once again surprised his world by announcing his withdrawal, Friday, May 13, pending details on the proportion of fake accounts on the social network. The argument has the trappings of pretext, for many observers. He had made this question an axis of reform of the social network. Above all, the subject has been in the news on Twitter for years.
Does he want to lower the price of his purchase? While he acquired Twitter by taking each share at a price of around 54 dollars, it has fluctuated since the announcement of the takeover rather below 50 dollars. The billionaire has above all pledged part of the shares of his flagship company Tesla to finance his project. He also separated from a good part. Since then, the value of his iconic brand has plummeted. Some investors fear the Twitter acquisition will weaken Tesla. The economic power of Elon Musk could be upset.
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So he might have to jump ship Twitter before the whole galaxy he’s been building for decades takes on the water. If he withdraws, Elon Musk will be forced to pay a billion dollars, according to the forfeit clause signed with the board of Twitter. An option that the richest man on the planet no longer excludes if he wants to continue to be.