Scott Olson
Billionaire Elon Musk’s completion of his $44 billion purchase of Twitter likely has ramifications for others in the social media world, most notably former President Donald Trump’s platform Truth Social.
With Musk now in charge of the social media juggernaut, investors are wondering if/when he will allow Trump back on Twitter. Investors have feared since the Tesla chief announced he would buy Twitter that he would allow Trump back after he was banned last year. That concern is partly responsible for the 82% plunge in SPAC Digital World Acquisition (NASDAQ:DWAC), which is taking Trumps’ social media company public, since it highs in early March.
Investors worry that Trump may want to give up his 4.37 million subscribers on Truth Social to go back to his 80 million Twitter followers.
Digital World (DWAC) initially fell in trading on Friday after Musk officially took control of Twitter, though the shares finished up 3.8% at least partly after Trump said he would remain on Truth Social.
“I am staying on Truth,” Trump told Fox News Digital on Friday. “I like it better, I like the way it works, I like Elon, but I’m staying on Truth.”
Trump declined to say if we would ever go back on Twitter, though the added that “I don’t think Twitter can be successful without me.”
Video platform Rumble (NASDAQ:RUM), which is viewed as a conservative alternative to Google’s (GOOGL) YouTube, may also benefit from a Twitter run by Musk. Rumble’s shares surged over 60% this week.
Rumble, run by CEO Chris Pavlovski, has gained much attention this year as alternative YouTube platform and after it announced a deal with former Trump’s s social media company and his platform Truth Social.
Even Musk seems to be interested in Rumble (RUM) after a tweet late last month to Pavlovski where he said “Maybe worth talking at some point.”
The move in Rumble (RUM) also comes after Google (GOOGL) said on Tuesday in its Q3 earnings that YouTube ad revenue fell by 2% to $7.1B, or about $400M shy of analysts’ forecasts. Google also disclosed that some advertisers incresed their pullback on ad spend in the third quarter. Some investors may see Google’s YouTube miss as a potential gain for Rumble.
It’s unclear what Musk’s takeover of Twitter means for Meta Platforms (META), through the Mark Zuckerberg-led company has its own issues to deal with as the stock has dropped over 70% this year, including a 25% plunge on Thursday after reporting a grim quarterly report and outlook. Meta likely has more to worry about from competition from TikTok than Twitter.
“We believe Meta is undergoing a business transformation in a challenging macro, privacy, and competitive environment,” Keybanc analyst Justin Patterson wrote in a note when he downgraded the stock to sector weight this week. “While we are encouraged by progress with short-form video, we believe data center and R&D investments are likely to lead to higher operating costs over the medium term, and thus prevent Meta from returning to 2019 margins.”
Some investors are still skeptical that a Musk-let Twitter will be any better than the social media platform is today.
Twittter’s “best days are behind it,” Lo Toney, founder of venture capital firm Plexo Capital, said in an interview on CNBC on Friday. “I think it’s going to be too difficult for brands to be comfortable in the environment that Elon I know wants to have.”
