Elon Musk has restored former US President Donald Trump’s Twitter account which was suspended following the 2020 Capitol Hill violence. Trump is not keen to join the social media platform again. But then should Musk really mind?
Musk held a Twitter poll on whether Trump’s account should be restored. Just over 15 million people participated and 51.8% of the respondents said that Trump’s Twitter account should be restored.
After the poll, Musk tweeted, “The people have spoken. Trump will be reinstated.” Notably, restoring Trump’s Twitter account following the Twitter poll is yet another about-turn for Musk. He had previously said that “major content decisions or account reinstatements” decisions would be taken by a “content moderation council with widely diverse viewpoints.”
That said, Musk talked about restoring Trump’s Twitter account even before he formally acquired the company. He had termed banning Trump from Twitter “morally bad” and “foolish in the extreme.” He added, “I think that was a mistake because it alienated a large part of the country and did not ultimately result in Donald Trump not having a voice.”
It’s not even been a month since Musk acquired Twitter and the period has been chaotic, to say the least. From cutting Twitter’s workforce in half to firing contractors unannounced, Musk has taken several measures to lower the company’s cost base.
His internal emails to Twitter employees sound threatening and he has fired people who don’t agree with his vision for Twitter.
Trump Turns Down Musk’s Offer to Rejoin Twitter
Coming back to Musk restoring Trump’s Twitter account, previously also, Trump had junked Musk’s offer to restore his Twitter account. The former President has snubbed Tesla CEO yet again and said he does not “see any reason for” re-joining Twitter.
Notably, Trump has launched his own social media platform called Truth Social which he says is doing “phenomenally well”. Truth Social is part of TMTG (Trump Media & Technology Group) which has announced a merger with Digital World Acquisition stock (NYSE: DWAC).
While most SPACs are trading below the IPO price of $10, DWAC is trading above $20. At its peak, it almost hit $100 which is a rarity in SPACs. We have a guide on how investors can buy DWAC stock.
That said, DWAC’s merger with TMTG has been somewhat troubled as SPAC hasn’t been able to seek shareholder approval to extend its life. The deadline for the next meeting is also approaching.
DWAC is Merging with Trump’s TMTG
Most of DWAC’s stockholders are retail investors who typically don’t participate in such voting. However, in order to delay the merger, DWAC needs approval from at least 65% of the stockholders. If it fails to get the approval, it would need to dissolve.
The PIPE investors are also having second thoughts about their investments. DWAC had previously lined up $1 billion in PIPE (private investment in public equity) investment for TMTG. In an SEC filing, it said that it has lost $138.5 million in financing from these investors. DWAC also changed its address to a UPS Store in Miami.
While Trump has said that TMTG is doing well, the company has been marred by slow growth and top-level exits. The subscriber growth of Truth Social has been far from satisfactory and even Trump has under 5 million followers there, which is way below the nearly 90 million Twitter subscribers he had before his account was banned.
In August, William Wilkerson, a senior vice president at Trump Media, filed a whistleblower complaint with the SEC, alleged securities violation.
Should Musk Fret Over Trump Not Joining Twitter?
To be sure, Twitter has its own share of problems. Twitter’s finances were anyways not in sound shape before Musk took over the company. The microblogging site is now witnessing an exodus of advertisers from the platform.
General Motors, Chipotle Mexican Grill, Audi, United Airlines, Mondelez International, and General Mills are among the companies that have paused ads on Twitter. To add to the woes, Omnicom has recommended its clients pause their ad spending on Twitter.
If Trump were to join Twitter, markets fear that many more advertisers might pull out of the platform. Musk was looking to diversify Twitter’s revenue base by moving to a subscription format and started charging $8 per month for the blue tick. However, the company has put the $8 per month subscription on hold after multiple imposter accounts.
Overall, Musk might not fret much over Trump not joining Twitter. Along with a possible exodus of advertisers, Trump is pretty much a competitor to Musk as Truth Social competes with Twitter in the social media industry.
Tesla Stock Has Crashed after Musk acquired Twitter
Tesla stock has crashed to a two-year low amid the Twitter drama. Some of the Tesla bulls see Musk’s association with Twitter as a needless distraction at a time when EV (electric vehicle) competition is heating up.
Even long-time bull Dan Ives removed Tesla from his top ideas list. Ives however maintains a buy rating on Tesla stock. Many other analysts see the Inflation Reduction Act as a positive for Tesla as it would restore the tax credit for Tesla cars from 2023.
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This article was written for Business 2 Community by Mohit Oberoi.
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