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Elon Musk is an enigma. Some say it’s a trickster of epic proportions. There are others who say he is changing the world for the better. I don’t know what to think of Elon Musk, to be perfectly honest. But I do thinks he is a smart man who knows how to make money very well. After taking a 9.2% stake in Twitter (NYSE: TWTR), Musk has become the largest shareholder in one of the world’s most popular social media platforms.
This week completely changed my personal view of Twitter as an investment and potentially even as a consumer. Not only has Musk now taken a large stake in the company, but on Tuesday morning it was announced that Musk would be getting a seat on the board. This means that Musk is the biggest investor, is a member of the board of directors and is among the top 10 followers on the platform itself. Arguably, Elon Musk is now the most powerful influence on what happens with Twitter going forward. Even more so than the company’s own CEO, Parag Agrawal.
Musk’s voice matters
Elon Musk has over 80 million Twitter followers. That puts it at number 8 on the list of top accounts by total followers now that Donald Trump and Ariana Grande are no longer on the platform.
| Rank | Account owner | Subscribers (millions) |
| 1 | barack obama | 131.3 |
| 2 | justin bieber | 114.3 |
| 3 | Katy Perry | 108.8 |
| 4 | Rihanna | 105.9 |
| 5 | Cristiano Ronaldo | 98.7 |
| 6 | Taylor Swift | 90.4 |
| — | donald trump | 88.8 |
| — | Ariana Grande | 85.3 |
| 7 | Lady Gaga | 84.4 |
| 8 | Elon Musk | 80.5 |
| 9 | Narendra Modi | 77.6 |
| ten | Ellen Degeneres | 77.5 |
Source: Wikipedia, data as of March 1, 2022
With such a massive following, what Musk says and does on the Twitter platform matters. Beyond that, sampling Musk’s massive follower base is a great way to get market research at virtually no cost. At March 25Musk asked him this:
Freedom of expression is essential to the functioning of a democracy. Do you think Twitter strictly adheres to this principle?
Voters had the option of saying yes or no. Over 2 million Twitter users voted. 70.4% answered “no”. This is a clear indication that Twitter might have a problem. But problems usually also present opportunities. Even though many competitors have entered the social media landscape with the promise of offering a free speech alternative to Twitter, none of them have been able to capitalize on the market’s appetite for less. of social media censorship. I’m speculating, but I imagine Musk took note of the failed launches and fragmentation.
Closing the competitor window?
Others have argued that Twitter could prove its worth as a meme store. I think Logan Kane’s Monday article makes some good points and it’s a thesis worth considering. However, I will approach this from a very different angle. I have a more consumer-centric view on Twitter because, personally, deleted my twitter account last January and have been trying alternatives ever since. As Twitter investors probably know, there has been no legitimate heir to Twitter from a competing microblogging platform. No one seized the opportunity that was presented by users’ angst over Twitter’s platform policies.
| Platform | Total number of visits (January 22) |
| 6,500,000,000 | |
| Gab | 18,200,000 |
| GETTR | 10,000,000 |
| Speaking | 1,800,000 |
| spirits | 1,100,000 |
Source: Similarweb.com
Twitter’s fledgling competitors who claim to be proponents of free speech have been harmed by fragmentation, botched launches, great technological collusionand number of shady users. Given this, the timing of Musk’s activity with Twitter is interesting. If there was any belief that Donald Trump’s social truth would be catapulted into a significant Twitter alternative, the deployment of this platform has likely been damaging enough to seriously damage that thought. This launch was so bad that there is even speculation that the planned merger with Digital World Acquisition Corp. (DWAC) could be in trouble. Consumer interest in the app seems to have also fell. After a spike in Google search data at the time of the platform’s launch, the search term “Truth Social” has since shown a sharp decline in interest.
Search Term “Social Truth” (Google Trends)
It doesn’t appear to be exclusive to Truth Social either. Generally speaking, platforms that present themselves as free speech competitors also potentially face declining interest. Consider that “alternative to Twitter” as a search term also failed to gain momentum following the spike in interest last February.
Search Term “Twitter Alternative” (Google Trends)
The user experience advantage of Twitter should also not be overlooked. Based on both average site duration and bounce rate, Twitter users are significantly more engaged with the platform than most competitors, according to Similarweb. And some of Twitter’s alternative platforms saw bigger declines in usage from December to January than Twitter.
| Platform | Construction time | Visits month/month | Rebound rate |
| 10:41 | -7.3% | 31.8% | |
| Gab | 9:15 | -2.7% | 39.7% |
| GETTR | 7:10 | -42.1% | 42.4% |
| Speaking | 3:33 | -4.7% | 59.5% |
| spirits | 5:28 | -19.5% | 37.9% |
Source: Similarweb.com, January 2022 data
I can share that I’ve personally tried to find a platform that provides a similar level of enjoyment to what Twitter once gave me, but also balances what I want from a business from a social and philosophical. While there is a platform it’s clearly my favorite of the Twitter alternatives, I would definitely consider doing it again with Twitter if I had confidence in the company’s commitment to enabling real talk. For this reason, I find the developments regarding Elon Musk and Twitter very interesting.
Technical view
All of these points aside, I did not enter a long position at the time of article submission. The reason is that I think the price action has probably gotten ahead of itself after the last two sessions.
Twitter 05/04/22 Close (investing.com)
After two straight days with volume more than 20x above the 20-day average after Friday’s session, the RSI-14 on Twitter’s daily chart is now above 80. That’s very overbought. After opening above, stocks fell back below the 200-day moving average near the day’s low. I would like to see the stock calm down before having a long entry.
Conclusion
It seems that the most pragmatic way to have a leading social media platform that will legitimately commit to protecting an individual’s right to share their ideas is to change Twitter through investor activism and corporate governance rather than trying to create a new platform from scratch. Whether Elon Musk sees interest in Twitter’s competition dwindling or he’s just trying to fix a platform he loves as a user, I won’t speculate. But I think he made an incredibly interesting move by taking the stake he has. As a consumer, I sincerely hope he can influence change on Twitter. As a potential investor, I’m definitely keeping an eye out for some key levels going forward and wouldn’t rule out sticking around for a long time in the coming weeks.
One more thing
I am really excited to share that I will be launching a Marketplace service here on Seeking Alpha called Heretical Speculator PRO very soon. As we get closer to launch, I will be able to go into more detail about the service and the subscriber value proposition. Be sure to follow me so you don’t miss out on what’s to come!
