Elon Musk has never played by the rules.
He became the world’s richest man by making electric cars through a venture that, despite being unprofitable until 18 months ago, is somehow valued at more than $US1 trillion ($1.38t) — more than every other automobile manufacturer combined.
His other great business ventures involve exploring space (with SpaceX) and digging tunnels beneath the earth (with The Boring Company).
Neither of those turn a profit, just yet. But that hasn’t deterred his legion of true believers.
Part of the allure is that Musk is considered a visionary. He’s combined that with an extraordinary talent for putting together a management, manufacturing and marketing structure to efficiently source material and produce high-end product with a sharp focus on the future.
It’s a combination that has allowed even the most blue-blood establishment figures to overlook some of his more outlandish and erratic behaviour.
And there have been some doozies. Remember the time he sparked up a joint during a Joe Rogan podcast? Then there was his plunge into cryptocurrency, telling the world via Twitter that he would accept bitcoin for cars, and the sudden about face not long after.
What about the time he suggested one of the Thai cave rescuers was a “pedo”? He won the resulting defamation case but left many aghast.
And who could forget his pledge to launch a takeover of Tesla three years ago, only to reverse course 17 days later?
Mostly, Musk’s sins have been considered an aberration or a sideshow, even when they’ve attracted the attention of America’s corporate regulator.
After all, he has a brilliant track record of success, given he was one of the brains behind PayPal.
But this time, even his most ardent supporters have their doubts.
What does Elon Musk see in Twitter?
His $61.1 billion takeover of Twitter has left many analysts stumped.
While, like many of the billionaire’s other ventures, it has never turned a profit, many fear that it never will; that its best days are behind it and that its business model is seriously flawed.
No matter how you look at it, that is a lot of cash to fork out on a loss-making operation.
True, Twitter only lost $307 million last year, a much-improved performance from the previous year’s $1.58 billion dip into the red.
But compared with its main social media rival Facebook, Twitter has been a dismal failure when it comes to harnessing advertising dollars and, worryingly, it appears Musk has little idea how to turn that around.
If those difficulties already weren’t enough of a hurdle, his Twitter plunge has coincided with a dramatic shift in the global economic landscape.
After more than three decades of declining inflation and interest rates, global finance suddenly has been thrust into reverse with the prospect of a sharp rate hikes.
It is a situation likely to imperil debt-laden corporations and especially those that do not earn a profit, or at least enough of a profit to cover their debts.
Given it no longer will be listed on the stock exchange, Twitter’s finances will be far more opaque and share price pressures will no longer exist.
But Musk’s bankers, who are forking out about $32 billion to cover his purchase, will be keeping a keen eye on proceedings.
Concern over Musk’s views on free speech
Musk has long had a love/hate relationship with Twitter.
He is one of its most prolific and high-profile users, with about 83 million followers. He’s used it, much to the annoyance of America’s Securities and Exchange Commission, to announce many of his more controversial business moves.
More recently, he has berated the company for attempting to muzzle free speech and particularly his own.
And that’s what is troubling both corporate America and the broader community.
While moguls always have been attracted to media and the power it confers upon them, they’ve traditionally graduated to mainstream outlets. Think Amazon chief Jeff Bezos, whose company Nash Holdings owns The Washington Post.
As the world’s richest man with a penchant for the outrageous, Musk will become commander in chief of an outlet that has faced intense criticism for allowing misinformation on everything from politics to the pandemic to be freely distributed on its platform.
Recently, Musk has been leading the charge to wind back some of Twitter’s self-imposed restrictions, a shift many fear could see the platform once again thrust into the limelight as a tool for social division and political upheaval.
From a business perspective, such a possibility raises even more concerns.
Advertisers, particularly those that fear controversy, could disembark, which would further undermine Twitter’s financial performance.
And then there is the time involved. Twitter co-founder Jack Dorsey only recently had to choose between the company and his new venture Block, as it was believed he couldn’t devote the necessary energy to the social media site.
For a man as obsessive as Musk, brilliant though he may be, there are concerns his personal involvement could well cloud his judgement and draw attention away from what should be his primary focuses — Tesla, SpaceX and The Boring Company.
Tesla made $7.6 billion last year after making $1 billion the previous year. It was enough to wipe out all the losses it had racked up since it was formed.
“Which I think makes us a real company at this point,” Musk told investors on a conference call in late January this year.
Musk has pledged to stump up $29 billion in cash for the Twitter purchase. The rest will come in debt from the likes of investment bank Morgan Stanley.
To fund that, the Tesla boss will be forced to sell down some of the stock in his electric vehicle operation.
He may be worth more than $367 billion, but his net worth is based almost entirely upon the sky-high valuation of Tesla.
As we’ve seen in recent weeks, overvalued technology outfits such as Netflix — which plunged 38 per cent overnight last week — can suddenly unravel when things don’t go exactly to plan.