So Does Elon Musk Just Own Everything Now?
Elon
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Elon -
It may be a lot easier, if we all just sit back and accept that Elon is taking over the world. From space travel, digital payments, electric vehicles, and now social media and beyond, Elon Musk for better or worse, has his hands in your day-to-day life in one way or another. All hail your new commercial-sector overlord.
While we know that his plan is to make Twitter a truer form of “free speech” than what it is today, we know very little else about what will become of the blue bird once Musk finalizes his acquisition. What we can be sure of, is that there will be change, and the markets will react. In fact, TWTR is already trading up 6% on the day, with news that talks became serious into Sunday and that a tentative agreement has been struck today.
How EXACTLY we anticipate this social privatization to affect the markets is a little bit cloudy still, but there are a couple things we are watching in the short-to-mid-term:
1) US-Based tech stocks: The hype that this purchase is going to bring Twitter in the short term cannot be overstated. Users will flock to the platform to see if their experience changes (for better or worse) and the short-term user numbers should explode. As a product of this, keep an eye on other US based tech and social being buoyed by the hype. Snap, Meta, Alphabet and others should enjoy a short term rise with the excitement around a new Twitter. Conversely, if this great experiment was to fail, and users decide to flee, gains would be exponential for Twitter competitors.
2) Crypto to gain strength: All aboard the Elon train!! Remember 2021 when Elon pushed Dogecoin into the global conversation, and began accepting BTC (although briefly) as a payment method for Teslas? Well, get ready for more of the same. Will Twitter start to accept ad revenue via crypto? Will they try to build a peer-to-peer payment product (Think, Venmo) that allows Crypto as a currency? Who knows for sure but get ready for the possibility of crypto gaining ground if any of these forward thinking ideas start to hit the presses.
3) Twitter Revenue Risk: We already talked about a short-term spike in Twitter activity and share price, but what is going to happen in the long term? If the original goal of creating a “true forum for free speech” comes to fruition, what will happen to ad revenue? Will Nike be willing to serve ads beside tweets that could contain hate-speech and radicalism? If things are completely ungoverned, it wouldn’t be difficult to envision advertisers starting to shy away (Worth noting that ads on the platform made up 89% of Twitter’s revenue in 2021). Will Musk be able to maintain existing revenue streams under a new operating model? That will be the question.
4) The Donald: The elephant in the room. Will Donald Trump be released from Twitter prison? And if so, what will that mean leading up to the next US election cycle? What will it mean for public opinion around tensions in Eastern Europe? (You know he has some opinions to share on that). We may see the chasms in American social discourse start to widen even further if/when Trump is re-released into the Twitter wild. Buckle up for election season, as the GOP will likely rally around Trump getting his social voice back. Look for more USD volatility if this happens.
In Summary:
Twitter: SOLD (likely)
US Tech Stocks: BUY!
Donald Trump: BACK?
Elon Musk: OVERLORD
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