London Mayor Sadiq Khan warned this morning that “freedom of speech cannot mean a free pass to hate” – a stark reminder of the importance of moderating online communities.
Freedom of speech cannot mean a free pass for hatred.
We must not forget the impact of online hate speech, which inflames the flames of prejudice and leads to horrific and tragic violence in the real world.
Social media companies need to do more, not less, to protect their communities.
– Sadiq Khan (@SadiqKhan) April 26, 2022
AJ Bell’s Russ Mold also has a pure analogy with Wilde for the Twitter deal:
“It’s not indescribable in the pursuit of the uneaten, as Oscar Wilde once described fox hunting, but Elon Musk’s campaign to buy Twitter can be seen as an unpredictable pursuit of the unprofitable.
Elon Musk’s best description of buying Twitter I’ve ever seen:
The unpredictable in the complete pursuit of the unprofitable.
(Note: Does this make the deal irrelevant?)
– Ben Wright (@_BenWright_) April 26, 2022
Twitter made a loss of $ 221 million last year, drawn down by a lawsuit.
Mold adds:
“A price of $ 44 billion compares to a projected net profit of just $ 112 million in 2023 and $ 324 million in 2023, equivalent to a price / profit ratio of over 100 – a huge premium compared to the US stock market.” who traded on forward multipliers of profits in the mid-20s (and mid-30s, according to the cyclically-adjusted price gains of Professor Robert Schiller, or CAPE, ratio).
Analyst: There is still some risk to the deal
Although Twitter shares rose more than 5 percent yesterday to almost $ 52 each, they are trading under Musk’s “best and last” offer of $ 54.20, which Twitter accepted.
This suggests that there is some skepticism that the deal will definitely be completed, said Russ Mold, investment director at AJ Bell.
“The social media platform is currently trading at $ 51.92, although the board agreed to sell the company for $ 54.20 per share. This approximate difference of 4% is the way for the market to say that there is still some risk to the deal.
“After all, Musk is one of the most unpredictable heroes in business today, and until his offer to buy the company came out of the sky and was recommended by the board in just a few weeks, it was not a deal until he had all the support he needed. by shareholders and the money was transferred from his account.
Shares of Twitter have already risen after Musk revealed his 9% stake in the company three weeks ago. His offer was almost a 40% markup over the closing price the day before this unveiling, although it is below the all-time high of $ 77 on Twitter, set in February 2021.
Muhl also sees risks in Musk’s insistence on more freedom of speech on Twitter:
“Twitter has a lot of passionate users and the company will have to work hard to keep them and attract new users if Musk sets out a regime that changes the way the platform works.
“Suggestions to limit bot accounts would benefit users, but not everyone likes the idea of complete freedom of speech. An unmoderated platform can promote a toxic environment and see consumers leave en masse. “
Wealth manager Ross Gerber has a much more positive outlook on takeovers.
Gerber, a Tesla investor described as close to Elon Musk, told Today that Musk wanted to protect Twitter’s “integrity” on behalf of the public.
This is really about controlling a critical asset for society.
Manipulation of social media is one of the most devastating things that has happened to society in the last five or seven years, says Gerber, which has led to elections in the United States, the United Kingdom and elsewhere being deliberately manipulated by foreign actors such as Saudi Arabia. and Twitter investor) and Russia.
The reason Elon intervenes is not freedom of speech in itself, but to protect our democracy, this is a bigger problem.
I couldn’t be happier to see Twitter taken over by Elon. A huge blow to Russia and Saudi Arabia and their agreement to destroy and manipulate American democracy. This has always been much bigger … $ twtr $ tsla
– Ross Gerber (@GerberKawasaki) April 25, 2022
Gerber says cleaning Twitter from bots, as Musk has promised, will solve the problem, and that it is wrong to think that Musk will now be in charge of moderating Twitter.
What really interests him is the transparency of the platform for what is being decided.
Gerber also argues that critics of Musk should “give the man a chance”, arguing that the current Twitter leadership is doing “terrible work” in moderation and social manipulation.
Gerber, who bought more shares on Twitter after Musk made his offer earlier this month, insists Musk will add a lot of value to the company.
Gerber also told the Washington Post overnight that Musk was “more powerful than the countries now” as he added Twitter to a portfolio that included Tesla and rocket company SpaceX.
“It has the most important technological asset in America – probably one of the most strategic military assets in the world – and now it has one of the most important communication tools in the world.”
Musk “may not realize” the challenges of content moderation
Vivian Schiller, a former head of news and journalism partnerships on Twitter, fears that Elon Musk does not understand the nuances of moderating content.
Schiller told Radio 4’s Today that she felt “existential fear” when the deal was announced and was worried about how Musk imagined what the free speech platform looked like.
Schiller, now executive director of the Aspen Institute, explained that moderating content – deciding what to leave, remove, block, stop or intensify – is “incredibly nuanced, complex and very imperfect art.”
Although Twitter “fucks up a lot” and makes some inconsistent decisions, Schiller says his current leadership is trying to balance free expression against potential harm.
These harms may include threats to individuals, hate speech based on race or gender, or threats to democracy (such as the uprising in the United States Capitol, which led to a ban on Twitter by Donald Trump).
Schiller, who is also director of the Guardian’s Scott Trust, also suggests that Musk’s ideas for protecting freedom of speech on Twitter are superficial or naive, given the challenges of moderation.
I think he may just not realize that the decisions that will have to be made, ultimately to contact him, are incredibly complex.
It’s easy to say, “I believe in free speech,” Schiller added, but what do you do when you talk about incitement to violence, hate speech, or other forms of really disturbing content?
By the way, CNBC points out that Musk’s commitment to freedom of speech does not extend to Tesla’s outgoing staff:
When it comes to his employees’ freedom of speech, Musk has shown little tolerance.
Under his leadership, when Tesla fired employees, they were asked to sign separation agreements, including a strong no-end devaluation clause. These types of agreements are not uncommon in the industry, but Musk is far from an absolutist of free speech here.
Musk also memorably cut off an analyst who asked about Tesla’s capital requirements during a 2018 earnings call, saying: “Excuse me, next, next. Boring, crazy questions aren’t cool. ” More here.
Updated at 10.38 BST
What analysts say
Freetrade senior analyst Dan Lane has warned that Musk’s takeover of Twitter could be a “catastrophe waiting to happen” that could divert him from Tesla’s management.
In what feels like a turning point, with the war in Ukraine clearly showing the need for further renewable energy, Musk could instead jump into the biggest vanity project the world has ever seen.
Far from the grandiose ideas of promoting free speech, what Musk actually sees is a special situation here, much like any other value-oriented investor. But it will take time, resources and a learning curve before he can carry out any serious plans he has in mind and, most importantly, unlock any hidden value.
Then there is the cultural gap between working at Tesla and Twitter. Will Musk’s new employees join the plans? Have they waited for a new direction or will the acceptance be as hostile as the offer?
The point here is that the market does not know whether it is arrogance leading the way or genius.
Musk flies between the two regularly, let’s see who it is and whether it’s worth taking a look at the Tesla ball.
Victoria Scholar, head of the interactive investor investment department, says Musk could improve Twitter’s usability and provide better revenue from the site (an area where previous management had difficulty).
Big questions remain about what Musk’s leadership will mean for the company. There is a possibility that its headquarters will be moved to Austin, the number of employees may be reduced and there will probably be an ideological change in the company’s focus from moderating content and instead to freedom of speech. However, despite speculation, Fox News reports that Donald Trump will not return to Twitter, as he uses his own platform Truth Social instead.
Overall, stakeholders will hope that Musk can inject some of his Tesla-style magic to improve usability, as well as monetization, two things Twitter has struggled with for a long time and more than most of its competitors.
Tesla, meanwhile, is under pressure from growing nervousness among investors that its CEO will now be scattered too weakly, distracted by electric vehicles from his new role as a social media mogul.
Neil Campling, head of TMT Research at Mirabaud Equity Research, said Musk was “flaunting his strength” with the deal, but could also lose money.
Musk flaunts his strength. Musk flaunts his influence. Musk’s deal on Twitter is that “Free speech is the foundation of a functioning democracy, and Twitter is the digital city square where it matters …
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