After Elon Musk’s purchase of the “Twitter” platform, economic analysts expect this move to make the platform far from the restrictions of stock exchanges, but in return there are obstacles that may prevent its freedom in the market.
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Elon Musk’s purchase of Twitter
The Twitter platform will exit the stock market because of Elon Musk’s purchase of it, and this move that Musk took would make the platform immune to market restrictions, but the success of this process is not guaranteed.
The company that enters the stock exchange often grabs the headlines to raise money or allow its founders, investors and employees to sell their shares, but it also happens that companies withdraw from the stock exchange in order to correct their situation with the possibility of re-listing their shares in the market.
For example, Michael Dell expelled the company that bears his name from the stock exchange in 2013 in light of the decline in demand for desktop computers, considering that they would be “more flexible and capable of entrepreneurship.” Dell returned to Wall Street after five years after correcting its position.
Venture capital firms regularly buy listed companies in the hope of making profits through drastic measures such as massive exchanges or by merging them with another company they own.
But with regard to Twitter, Elon Musk’s intentions remain ambiguous. The world’s richest people have repeatedly spoken of his intention to defend freedom of expression by adjusting some functions in this social network, but he has not yet presented any specific economic strategy.
Withdrawing from the stock exchange means fewer restrictions
Withdrawing from the stock market allows companies to escape multiple pressures from shareholders and public opinion that impose too many restrictions on management and prevent them from using their capital effectively, said William Lee, chief economist at the Milken Institute.
He added that the new owners of some of the companies that are withdrawn from the stock exchange are becoming “more stringent in terms of investment returns.”
He believes that the difference lies in that the company whose shares are listed on the stock exchange must take into account shareholders who care about issues of diversity, environment and wage scale, among other things, while the investment company focuses especially on the operational and financial aspect.
Twitter won’t give up on ads easily
In turn, economist Grigory Volokhin said that Twitter will not be able to abandon the ads as suggested by Musk, because it must pay back loans granted to him to finance his recent purchase.
With Wall Street’s watchful eye, which often demands immediate results, Volokhin stresses, companies often struggle to move forward because they don’t necessarily have the margin to test new products.
An unlisted company does not have to publish its quarterly results and comply with the requirements of the US Securities and Exchange Commission (SEC), and Elon Musk does not seek short-term profitability, as he has demonstrated with Tesla, SpaceX, or other initiatives.
On Monday, Twitter announced that it had accepted the offer of American billionaire Elon Musk The platform was purchased for $44 billion.
Under the terms of the agreement, Twitter shareholders will receive $54.20 per share, while Musk will acquire all shares in the social media platform.