So Elon Musk is hedging on his bid to buy Twitter saying he’s got to look at the number of reported fake accounts vs the reality of it all. Is it a ploy or is he serious? How does this affect my purchase?
When I first read about this, my heart sank. I have no doubt Twitter’s fake accounts are above 5%. Could this kill the deal? Of course the price of the stock has sank well below my purchase price. I’m losing money. But do I care?
Not really. I bought Twitter on principle. I advocated buying stock in order to have some modicum of influence. By now you know my “influence” here amounts to pissing on the dumpster outside corporate headquarters. Well, okay, not that much because at least that could get be arrested. Like I said… principle.
Add to the principle, I’ve said all along I would rather we ALL bought Twitter rather than expecting Elon to carry the entire load. I wasn’t all that hyped about selling my shares for a few dollars profit. I wanted to be on the “inside”, even if he took the company private. Of course the reality was I’d be more like a fly on the wall there, you know, the one that got swatted. So much for that.
In no way did I consider Twitter’s profitability or should I say their inability to turn a profit. At this point, Twitter’s losses give me more leverage to hold them accountable. It is likely the only real leverage someone like myself is likely to have, as long as I am a lone wolf or the pack is small. However, that was the one bright spot I saw in the event Elon took it over. At least he seems to have a head for business.
So is all lost? Was this an exercise in foolishness? Maybe. Acting on principle can often be a lost cause. Unlike the movies there is a very real chance I could lose a substantial portion of the money I’ve in this. I knew this going in and let’s face it, we’re talking about less than $500 here. I’m not going to starve for that. Besides, it was never about the money. So let’s talk principle.
Twitter has turned themselves from platform to a publisher. A platform offers a place for people to speak freely. Obviously those running this shitshow don’t want that. Federal law is no help. Section 208 gives these platforms a huge loophole so they can censor to their heart’s desire and still be protected from any lawsuits. If you ask me, any politician who voted yea on this legislation should be immediately dismissed for being either too stupid, lazy or compromised to properly vet the bill.
As I delayed posting this, news has surfaced. It appears Elon Musk wants to renegotiate the deal as it now seems as much as 20% of the accounts are fake and/or bot accounts. Is anyone surprised?
I can’t say as I blame him. He correctly points out how this directly relates to advertising revenue as pricing is and should be directly related to reach. Bots don’t buy shit. And advertisers don’t want to pay to reach them. Having been there myself, I can tell you from experience that cost is a huge factor in online advertising. The most important factor is arguably the conversion ratio – how many times the ad is displayed vs how many times someone clicks on the link. In the best of times this metric is extremely low, meaning it has to be displayed lots of times to get enough eyes on whatever is being advertised to make it profitable. Now skew those numbers by 20%. Ouch.
So, yeah, the fake to real account issue is a major factor. No doubt by now, those advertisers now spending money on Twitter are reevaluating their efforts, if not pulling back or pulling out altogether. However, this may not be as critical as one might think. Any serious advertiser ultimately considers the bottom line – the ROI or return in investment. If their advertising is making money for them then these recent revelations should actually be good news. Why? Because they should expect and demand a reduction in cost to reflect the true metrics, thus making their advertising even more profitable. Good for the ad buyers, not so much for Twitter as they could likely see up to a 20% reduction in ad revenue right off the bat.
Then again, once one accounts for a 20% bot account rate, it should make the ROI on advertising look much better. Either way I don’t think this is a game-changer unless one was counting in Elon’s offer to make a killing on Twitter stock. In such cases, well, speculation can be a bitch.
As far as I’m concerned, I’m happy with my sliver of Twitter for the moment. Sure I would be happier if I’d bought at $35 or less than at $46 but it’s not the end of the world either.