Elon Musk takes charge of Twitter. Wall Street sees a

Elon Musk, who changed his Twitter handle to “Chief Tweet”, announced late Thursday that “the bird is set free” because he took control of social media platform. The question now is whether the billionaire Tesla CEO can grow the business while fulfilling his pledge to turn it into a bastion of free speech.

Wedbush analyst Dan Ives told CBS MoneyWatch that balancing those goals would present an “Everest-like climbing battle,” noting that he gives Musk “less than a 50% chance of actually turning it down.”

Musk made a variety of statements about his vision for Twitter, while sharing some concrete plans, some seem contradictory. But some of their challenges are clear, according to analysts.

First, Musk paid a hefty premium to buy Twitter for $44 billion, which would put pressure on him to cut costs. Second, Twitter is struggling to attract advertisers, which is unlikely to be easy as the economy slows and possibly enters recession subsequent years.

“He’s buying this property at the worst possible time,” Ives said. “We are in the middle of a massive social media meltdown.”

He continued, “Buying Twitter is the easy part – the hard part is fixing it.”

At the same time, the New York Stock Exchange began the process of delisting Twitter on Friday, meaning most of Musk’s moves will not be transparent to investors and observers. And without an answer from the share price and large institutional investors, Musk may feel excited to put his stamp on the company, Eric Gordon, a professor of business at the University of Michigan, posted on The Conversation.

Here are three issues Musk is facing as he takes the helm on Twitter.

win over advertisers

Musk has criticized Twitter’s reliance on advertisers, but made a statement on Thursday that was intended to assuage his fears. He assured marketers that he wanted the service to be “the most respected advertising platform in the world”.

But advertising on Twitter has slowed sharply, with the company blaming the “macroenvironment” amid uncertainty over its acquisition of Musk. Ad sales grew 2% in the second quarter, a significant decline from a 23% jump in ad revenue during the first quarter.

Musk can not only retain current advertisers, but convince newcomers to sign up for the platform, a lot is riding on it: About 90% of the service’s revenue stems from advertising.

free-speech floodgate opening

Musk has said that he wants to promote free speech by loosening the way Twitter moderates content. Wall Street analysts say the risk is a tide of online toxicity that drives users and advertisers away.

Musk said on Thursday that he does not want Twitter to become a “free hellscape for all.” But it has previously indicated that it may restore the accounts of some former Twitter users who were banned for violating the company’s standards and policies. On Thursday, a conservative commenter tweeted Musk that he “still removed 1200 followers from Shadowband, Ghostband, Searchband, and Twitter today — as usual.”

Musk said on Friday that Twitter will create what he calls a “content moderation council with widely varied perspectives,” adding that anyone whose account has been banned will have a chance to meet that group before will not be restored.

For now it is unclear whether former President Donald Trump will return to the service, something that Musk has said will let If he bought Twitter. trump was Ban Permanently three days later from social media site Attack on the Capitol on 6 January Because of “the risk of further instigating violence”.

Ives said Musk could see Trump’s return to Twitter as a way to help boost engagement with other users. But he would walk a “political test” in doing so, he said.

For his part, Trump said Friday in a post on Truth Social, a conservative-leaning social network backed by his media company, that he is “very pleased that Twitter is now in wiser hands, and no longer run by Radical Left Lunatics.” And the crazy ones who really hate our country. Twitter must now work hard to get rid of all the bots and fake accounts that have hurt it so badly. It will be much shorter, but better. “

Mass layoffs coming?

Although Twitter is going private, Musk paid more for the money-losing business, which would pressure him to keep going, Ives said. Musk recently said with the Washington Post that Twitter has too many employees Reporting That it can cut its workforce by up to 75%.

Ives thinks job cuts could range from 30% to 50% of a company’s headcount. Yet while Musk can cut costs, “he cannot cut his path to growth,” he said.

After taking control of Twitter, Musk fired CEO Parag Agarwal, chief financial officer Ned Sehgal and chief legal counsel Vijaya Gadde, according to the Associated Press, citing people familiar with the deal. Sehgal confirmed his departure in a series of tweets on Friday.

Musk is likely to recruit a seasoned social media executive to take charge of Twitter, though he will remain deeply involved with the company, Ives predicted. “With Musk, never count him,” he said. “He has been able to deflect skeptics over and over again.”

-With reporting from The Associated Press.

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