After Elon Musk finalized his purchase of Twitter on October 27, 2022, I wrote an article in which I warned, “We need to take seriously the possibility that this will end up being one of the funniest things that’s ever happened.”
Today, I have to issue an apology: I was wrong. Musk’s ownership of Twitter may well be — at least for people who manage to enjoy catastrophic human folly — the funniest thing that’s ever happened.
Let’s take a look back and see how I was so mistaken.
Musk began his tenure as Twitter’s owner by posting this message to the company’s advertisers, in which he said, “Twitter aspires to be the most respected advertising platform in the world that strengthens your brand and grows your enterprise. … Twitter obviously cannot be a free-for-all hellscape, where anything can be said with no consequences! In addition to adhering to the laws of the land, our platform must be warm and welcoming to all.”
Musk had to say this for obvious reasons: 90 percent of Twitter’s revenues came from ads, and corporate America gets nervous about its ads appearing in an environment that’s completely unpredictable.
I assumed that Musk would make a serious effort here. But this was based on my belief that, while he might be a deeply sincere ultra-right-wing crank, he surely had the level of self-control possessed by a 6-year-old. He does not. Big corporations now comprehend this and are understandably anxious about advertising with a company run by a man who, at any moment, may see user @JGoebbels1488 posting excerpts from “The Protocols of the Elders of Zion” and reply “concerning!”
The consequences of this have been what you’d expect. The marketing consultancy Ebiquity represents 70 of the 100 companies that spend the most on ads, including Google and General Motors. Before Musk’s takeover, 31 of their big clients bought space on Twitter. Last month, just two did. Ebiquity’s chief strategy officer told Business Insider that “this is a drop we have not seen before for any major advertising platform.”
This is why Twitter users now largely see ads from micro-entrepreneurs who are, say, selling 1/100th scale papier-mâché models of the Eiffel Tower. The good news for Twitter is that such companies don’t worry much about brand safety. But the bad news is that their annual advertising budget is $25. Hence, Twitter’s advertising revenue in the U.S. is apparently down 60 percent year over year.
I also never imagined it possible that Musk would rename Twitter — which had become an incredibly well-known brand — to “X” just because he’s been obsessed with the idea of a company with that name since he was a kid. It’s as though he bought Coca-Cola and changed its name to that of his beloved childhood pet tortoise Zoinks. The people who try to measure this kind of thing claim that this has destroyed between $4 and $20 billion of Twitter’s value. (As you see in this article, I refuse to refer to Twitter as X just out of pure orneriness.)
Another of my mistaken beliefs was that Musk understood the basic facts about Twitter. The numbers have gone down somewhat since Musk’s purchase of the company, but right now, about 500 million people log on to Twitter at least once a month. Perhaps 120 million check it out daily; these average users spend about 15 minutes on it. A tenth of these numbers — that is, about 12 million people — are heavy users, who account for 70 percent of all the time spent by anyone on the app.
Musk is one of these heavy users. He adores Twitter, as do some other troubled souls. But this led him to wildly overestimate its popularity among normal humans. A company with 50 million fanatically devoted users could possibly survive a collapse in ad revenue by enticing them to pay a subscription fee. But Twitter does not have such users and now never will, given Musk’s relentless antagonizing of the largely progressive Twitterati.
So how much is Twitter worth today? When Musk became involved with the company in the first months of 2022, its market capitalization was about $28 billion. He then offered to pay $44 billion for it, which was so much more than the company was worth that its executives had to accept the offer or they would have been sued by their shareholders. Now that the company’s no longer publicly traded — and so its basic financials don’t have to be disclosed — it’s more difficult to know what’s going on. However, Fidelity Investments, a financial services company, holds a stake in Twitter and has marked down its valuation of this stake by about two-thirds since Musk bought it. This implies that Twitter is now worth around $15 billion.
The significance of this is that Musk and his co-investors only put up $31 billion or so of the $44 billion purchase price. The remaining $13 billion was borrowed by Twitter at high interest rates from Wall Street. In other words, Musk and company are perilously close to having lost their entire $31 billion.
In the end, I did not understand Musk’s determination to torment himself by forcing his entire existence into an extremely painful Procrustean bed. The results have been bleak and awful for Twitter and the world, but not just bleak and awful: They have also been hilarious. Anyone who likes to laugh about human vanity and hubris has to appreciate his commitment to the bit.