Elon Musk’s looming purchase of Twitter is already showing adverse effects on the social media platform and beyond just two days removed from Twitter’s board of directors unanimously agreeing to the deal.
The fallout from Monday’s announcement saw Tesla lose upward of $125 billion in market value after the stock price tanked by more than $100 a share. The drop materializes worries about multiple ways Musk’s push to purchase Twitter could affect Tesla shareholders that emerged as the ordeal unfolded over the past few weeks.
Some showed concern that operating Twitter would provide another distraction for the Tesla CEO, who already balances time between the electric automaker, SpaceX, Neuralink and The Boring Company. Others pointed to how Musk’s continued promotion of his Twitter acquisition as a free speech preservation tactic could adversely affect Tesla’s relationship with the Chinese government, where a large amount of Tesla production and purchases occur.
Musk’s ability to finance the Twitter deal has also been a key point for Tesla investors. As stated by Twitter, Musk agreed to personally put forth $21 billion of the roughly $44 billion price tag through “equity financing,” but there has been little information about how Musk would fulfill that hefty task. The majority of his $259 billion in wealth is currently held in Tesla stock, meaning he likely would have to either sell or borrow against his shares in the company in order to procure the capital needed. Either of those options would negatively affect Tesla’s price per share, and it clearly already has before any public disclosure from Musk.
Twitter itself has dealt with wide follower fluctuation since Monday. Multiple accounts with large follower counts reported losing followers by the thousands, with some growing to hundreds of thousands. Former President Barack Obama, the most followed Twitter user, lost more than 300,000 followers since the acquisition was announced. Katy Perry lost more than 200,000 followers. At the same time, notable controversial right-wing figures, including Rep. Marjorie Taylor Greene and Brazilian President Jair Bolsonaro, have seen their follower counts rise by nearly 100,000.
Twitter confirmed to TechCrunch that the fluctuation in high-profile user follower counts were organic, attributing them to new profile creation and deactivation rather than an influx in bot account activity or any action by the company itself. Despite the determination, Twitter stated it will “continue looking into these follower count fluctuations.”
The social media platform did not release any exact numbers related to the account creation and deactivation in recent days, but Twitter users leaving the platform in the wake of the Musk deal has been a popular topic on the platform itself. “#RIPTwitter” trended shortly after news of the deal broke, and it appears that a large number of users followed through on the belief the hashtag exuded.
Even Musk himself may have landed himself in hot water in relation to his deal with the social media giant. A provision in the merger agreement between Musk and Twitter filed with the U.S. Securities and Exchange Commission on April 25 allows Musk to tweet about the merger as the deal clears its hurdles under the condition that his tweets “do not disparage [Twitter] or any of its Representatives.” On April 26, Musk wrote multiple tweets that potentially violate that measure.
“Suspending the Twitter account of a major news organization for publishing a truthful story was obviously incredibly inappropriate,” Musk tweeted in reference to Twitter’s top lawyer and safety lead director Vijaya Gadde. Musk’s comment was a reply to a tweet from right-wing podcast host Saagar Enjeti criticizing Gadde for her role in the brief suspension of the New York Post’s Twitter account in 2020 over a story on a laptop that belonged to Hunter Biden that was later proven to be true.
Gadde became a right-wing target this week after reports of an emotional internal meeting in response to the Musk deal. According to Politico, Gadde cried during a Monday meeting with the company’s policy and legal teams following the news of Musk’s acquisition of the company, expressing concerns about how Twitter may change under Musk’s leadership. She also shared how proud she was of her team’s work regarding content moderation on the platform.
Later that day, Musk replied, “Sounds pretty bad …” to a tweet from alt-right Pizzagate conspiracy theorist Mike Cernovich claiming that Twitter lawyer Jim Baker “facilitated fraud” during his time as an FBI general counsel. He also commented on Truth Social, the social media platform launched by former President Donald Trump, leading Twitter in downloads on Apple’s App Store.
Twitter is yet to comment on Musk’s tweets or if they constitute a violation of its agreement with him.