Elon Musk Takes Twitter Helm as Social Media Sputters

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With his six-month takeover saga behind him,

Elon Musk

now takes on the work of righting Twitter Inc.’s ship in what is shaping up as the most tempestuous business environment for social media in the industry’s history.

In just the past 10 days, as Mr. Musk’s $44 billion bid careened to the finish, the landscape turned increasingly challenging.

Facebook

parent Meta Platforms Inc.,

Snapchat

parent Snap Inc. and

Alphabet Inc.,

which owns Google and its video platform YouTube, saw their stock prices get pummeled after delivering a drumbeat of troubling data points.

YouTube posted its first-ever decline in advertising revenue, while Snap warned investors that it is operating on an assumption of no revenue growth this quarter from the year-ago period.

Meta, meanwhile, spooked investors with a revenue slowdown and a commitment to spending tens of billions more toward the building of the metaverse, which has yet to attract a significant user base. Meta’s market value dropped below $300 billion for the first time since early 2016.

Twitter shares some of the same challenges as its rivals, including a tough macroeconomic climate aggravated by inflation and the war in Ukraine, growing competition from rival TikTok and fallout from

Apple Inc.’s

ad-tracking changes.

Twitter has unique issues to face too, including potentially losing advertisers uncomfortable with Mr. Musk’s vision. While he has said he wants to bolster the company’s nascent subscription business and rely less on advertising, the latter makes up roughly 90% of Twitter’s revenue. In July, Twitter said uncertainty around the deal contributed to a surprise decline in revenue.

Some advertisers have expressed concern that Mr. Musk’s stated commitment to free speech will lead to a surge of content that is offensive to some users or at least not advertiser-friendly.

Elon Musk has purchased Twitter, ending a monthslong saga over whether or not he would go through with his offer to acquire the social media platform. WSJ takes an inside look at the tweets, texts and filings to see exactly how the battle played out. Illustration: Jordan Kranse

“Twitter’s ad business is already on shaky ground,” said

Jasmine Enberg,

principal analyst at Insider Intelligence, a market-research firm. In coming days, she said, Mr. Musk will need to “set clear guidelines for what content moderation will look like if he wants to keep advertisers around.”

On Thursday, the eve of the deal closing, Mr. Musk took steps to assure Madison Avenue, publishing a letter saying that he very much believed “that advertising, when done right, can delight, entertain and inform you.”

“Fundamentally, Twitter aspires to be the most respected advertising platform in the world that strengthens your brand and grows your enterprise,” Mr. Musk wrote. “To everyone who has partnered with us, I thank you.”

On Friday, he further reassured advertisers that no major changes were coming imminently. Twitter would be “forming a content moderation council with widely diverse viewpoints.” He added: “No major content decisions or account reinstatements will happen before that council convenes.”

He has also said repeatedly that his vision for Twitter is a place that is not toxic, but rather fun. On Friday night, he tweeted, “Comedy is now legal on Twitter.”

Among other things, Mr. Musk’s charm offensive could be complicated by his many outside business interests. Late on Friday,

General Motors Co.

said it was pausing paid advertising on Twitter.

“We are engaging with Twitter to understand the direction of the platform,” GM said.

GM is a close competitor with

Tesla Inc.,

the electric-vehicle manufacturer where Mr. Musk is chief executive and that is responsible for the majority of his vast fortune.

Mr. Musk, who spent months trying to back out of the Twitter deal, is well aware of the challenges.

“Obviously, myself and the other investors are obviously overpaying for Twitter right now,” Mr. Musk said on a Tesla earnings call earlier this month. He added, though, that “the long-term potential for Twitter, in my view, is an order of magnitude greater than its current value.”

Twitter for years lagged behind its rivals in attracting users and generating revenue, and its executives repeatedly pledged to get faster at developing new features.

Mr. Musk’s fans and investors point to his record as an innovator in a range of areas across the tech industry. In addition to Tesla, Mr. Musk was the CEO of the company that eventually became

PayPal Holdings Inc.,

and he made more than $100 million when the company was sold to

eBay Inc.

for $1.4 billion in 2002. That year, Mr. Musk founded Space Exploration Technologies Corp., or SpaceX, which is now valued at close to $100 billion.

“Elon has succeeded in many different industries,”

Roelof Botha,

the head of Sequoia Capital, told The Wall Street Journal this week. His firm committed $800 million to Mr. Musk’s deal. “He’s an incredible first-principles thinker,” Mr. Botha said.

One thing possibly working in Mr. Musk’s favor is that Twitter will become a private company as a result of the deal. This new status will afford Mr. Musk the ability to work on Twitter’s challenges free from public-market investor scrutiny and sentiment.

“Let the good times roll,” Mr. Musk tweeted Friday morning.

Write to Salvador Rodriguez at [email protected]

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