Elon Musk has been in charge of Twitter for less than two months but in that time has been an agent of change. He’s overhauled the company’s policy towards what is and isn’t acceptable content on the platform, has slashed costs, and thrown out many of the company’s longest and most loyal employees.
The problem is that Wall Street hasn’t taken kindly to Twitter’s new broom. This week Oppenheimer & Co, an equity research company, published a warning that it was downgrading its position on Tesla stock because of “Twitter-related risks”.
“We believe Mr Musk is increasingly isolated as the steward of Twitter’s finances with his user management on the platform,” they wrote. “We see potential for a negative feedback loop from departures of Twitter advertisers and users due to inconsistent standards resulting in increased financing needs that may lead to incremental [Tesla] sales just as Tesla’s competitive environment intensifies.”
In short: Musk’s control of Twitter, and his willingness to pour current Tesla engineers into redrawing the platform in his own image, is becoming a distraction that drags down his own companies.
Investors seem to agree. Tesla’s share price has lost two thirds of its value this year, reaching a two-year low – though the stock price momentarily rebounded slightly when Mr Musk lost a poll of his own users asking him whether he should stay as CEO of Twitter, by a margin of 57.5% to 42.5%.
The poll is “ridiculous”, says Melissa Ingle, a former senior data scientist at Twitter until she was laid off as part of Mr Musk’s firing of contractors. “I think he fundamentally misjudged [the poll] and then tried to walk it back,” she says. “It doesn’t add up to a picture of a CEO with a clear and compelling vision.”
Mr Musk has subsequently confirmed that he’ll cede power. “I will resign as CEO as soon as I find someone foolish enough to take the job!” he wrote overnight.
However, finding that replacement will be tricky. “Informing Twitter’s workers that the company could go bankrupt if he wasn’t able to turn it around is the kind of mission-driven language that he has used previously to instigate innovation and change,” says Jonathan Lord, lecturer in human resource management and employment law at the University of Salford Business School. But it also spooks those who might be interested in replacing Mr Musk into thinking this is an insurmountable task.
Anyone who takes up the offer of trying to turn around Twitter also has to wrestle with Mr Musk himself, who has said he will stick around to oversee some elements of the company he thinks are important.
That he has also said “no one wants the job who can actually keep Twitter alive” suggests how much he thinks of anyone who would be able to replace him – and therefore how much power any new CEO might really have.
Nor has he helped himself to put the company on a sure footing. Overnight, he revealed in a Twitter Space that the company’s advertising revenue is expected to be just $3bn (£2.48bn) in 2023, down from $5bn last year. In large part that’s because advertisers have deserted the platform, worried about the integrity of the content their adverts are served alongside.
That’s Mr Musk’s fault, say Twitter watchers. “He’s banjaxed the revenue by being a dick,” says Bruce Daisley, who was Twitter’s European vice-president between 2012 and 2020. Mr Daisley believes that his former boss still has the money and wherewithal to turn the company’s fortunes around and come out of it as a success – but it’ll be a Pyrrhic victory. “It’s like executing a 29-point turn,” he says. “Well done for turning the car, but let me show you an easier way.”
Mr Musk has hacked and slashed to the bone in the hopes of rebuilding the company in a way he wants, but with him willing to give up power at such a crucial moment, it means that whoever would replace him would be put in an unenviable position. Twitter has been gutted and beaten, battered and broken.
He must have thought that he had a plan to build it – or was confident enough in his own abilities to think he had an idea of what to do – but whoever comes in to replace him may have a different viewpoint on what’s needed.