Musk plan to take Twitter public again raises questions

Elon Musk has plans to take Twitter public again in a few years.

The following Cornell University experts are available for interviews. 

Drew Pascarella, senior lecturer at Cornell, is an expert on corporate finance and merger and acquisition transactions. A former senior investment banker, he has extensive expertise with transactions in the technology and telecommunications industries. He says for Twitter to be an attractive IPO candidate in a few years, Musk must improve Twitter’s business fundamentals and grow profits. 

Pascarella says: 

“In order for Twitter to be an attractive IPO candidate in 2-3 years, the company will need to be materially more profitable than it is today. Why? Because Elon is about to load a massive amount of debt onto Twitter’s balance sheet, which will need to partially be paid back by the time of the IPO.

“What is Elon’s plan for increased profitability? Jack Dorsey, by all accounts a supremely talented tech leader, wasn’t able to figure out how to do it. The IPO market will be watching closely to see if, under Elon’s ownership, the business fundamentals improve. If not, Elon could be the owner of Twitter for a long, long time.”

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Drew Margolin, professor of communication at Cornell, studies the way people communicate online and the role of accountability, credibility, and legitimacy within social networks. He says he’s surprised Musk would plan to take the company public given privately owning Twitter gives him oversight of public discourse and interaction.

Margolin says:

“I’m somewhat surprised by this assertion by Musk. The reason that buying Twitter and taking it private makes sense – for any number of potential investors – is that Twitter’s value, to the public, as well as to its ownership, is not in its profit margins. It’s a media company, one that shapes public discourse and interaction. That makes owning it valuable to important people. 

“Jeff Bezos owns a media company. Mark Zuckerberg, obviously. This gets them included in certain conversations. Musk is rich, but he sees that his primary access to voice his influence is through Twitter, which was owned by other people. Now it will be his. So, it’s worth a lot to him, or other very powerful people, even if it doesn’t make money.

“Going public again would not support this goal. So, I’m surprised. Basically, I don’t think Twitter is likely to be super profitable any time soon, but will always be a valuable asset nonetheless, like many newspapers.”

Cornell University has dedicated television and audio studios available for media interviews. 

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