The impact on markets of Elon Musk’s acquisition of Twitter

For now, the announcement of the acquisition of Twitter by the famous entrepreneur Elon Musk has only had a modest impact on the crypto Dogecoin. What will be the reaction of the markets in the long term?

What impact could Elon Musk’s acquisition of Twitter have on the markets? 

First of all, it is worth noting that the plan, accepted by the company’s Board of Directors, effectively involves the acquisition of complete control of the company, with the consequent delisting from the stock exchange. 

Therefore, once the stock is delisted, the impact on the share price will become irrelevant, until Musk decides to sell it again. 

But it seems that Musk’s move is not just a speculative one, so it seems very unlikely that he will put the shares back on sale in the short or medium term. 

Moreover, the impact on Twitter’s share price already occurred yesterday, with a significant +5.6% on a day when the Nasdaq stopped at +1.3%. In other words, it doesn’t appear that Twitter’s share price fluctuations, as long as they are tradable on the stock exchange, are having an impact on the prices of other assets or other stocks. 

On the other hand, this is the week in which many quarterly reports will be published, including Twitter’s own, and they will most likely be the biggest market-mover at this particular time. 

In the long term, things could change, especially if Elon Musk’s new Twitter manages to attract users from Facebook and Instagram. At the moment this does not seem possible, but it is very likely that Twitter will change significantly in the near future, perhaps to the extent that it will be able to steal market share from the two most famous social networks in the West. 

The response of the crypto sector

A completely different situation applies to the crypto markets. 

The news of the acquisition has already had a significant impact on the price of Dogecoin, which has risen almost 30% in the last 24 hours, and 14% compared to a week ago. 

However, the price has been in a steep decline since early April, so much so that despite the boom yesterday and today it has not yet managed to return to the levels of April 5. 

Some analysts even claim that this euphoria could prove to be unjustified if Elon Musk is not serious about integrating Dogecoin on Twitter. If this turns out to be the case, the rise may well be a flash in the pan. 

Collaborations between Elon Musk and Jack Dorsey

In the long run, however, it could have some impact on Bitcoin’s price, especially if the partnership with founder Jack Dorsey‘s company, Block, continues. 

The relationship between Musk and Dorsey seems very good, so much so that Dorsey himself publicly congratulated Musk after the acquisition with a tweet:

In principle, I don’t believe anyone should own or run Twitter. It wants to be a public good at a protocol level, not a company. Solving for the problem of it being a company however, Elon is the singular solution I trust. I trust his mission to extend the light of consciousness.

— jack (@jack) April 26, 2022

The relationship between Musk and Dorsey seems very good, so much so that Dorsey himself publicly congratulated Musk after the acquisition, hinting that he approves of it. 

It is worth noting that the price of Bitcoin has also risen by 5% in the last 24 hours.

The impact on Elon Musk’s personal wealth and on the economic and financial conditions of the companies that revolve around him is much more difficult to imagine. 

For example, Tesla’s share price moved yesterday on the stock exchange, but not by much, so much so that it eventually closed with -0.7%. 

The problem is the enormous debt that Musk has had to take on for this acquisition. In fact, Twitter’s revenues, and above all its profits, do not seem at all able to allow him to repay this debt. Nevertheless, if Musk’s intervention were to have the same effect on Twitter that it has had on Tesla over the years, we can expect a surge in revenues and profits for the renewed social network. 

Musk’s intentions for the “new” Twitter

Finally, there is also the impact that this acquisition could have at a social level, particularly with regard to freedom of expression. 

Musk has always maintained that this is the objective he is most interested in, even if it is legitimate to imagine that there could be much more underneath. 

I hope that even my worst critics remain on Twitter, because that is what free speech means

— Elon Musk (@elonmusk) April 25, 2022

Indeed, rumours have circulated that Donald Trump is not expected to return to Twitter even after Musk’s complete takeover. 

It is not at all clear what the new owner intends to do to promote free speech on Twitter, and it is not even certain that this is his main objective. 

For these reasons, it is impossible to imagine what impact this innovation could really have on society. In particular, if Musk intends to use his new social network for self-propaganda, the consequences on the relationship he has with the population of the United States of America could change considerably. 

However, as we do not know what his real objectives are, we can only speculate at this stage without any solid and concrete basis. By the end of the year, the situation could become much clearer.