Twitter’s new activist shareholder is cautiously optimistic

Last week, it became known that the famous entrepreneur Elon Musk became the owner of over 9 percent of the social network Twitter Inc. (TWTR). Such a share gives him the right to join the board of directors and influence the adoption of important decisions. Elon Musk thanks to his messages on Twitter, so some shareholders of the social network positively received the news about the new activist investor.

However, not all comments are enthusiastic. Some fear that Elon Musk cannot fix the difficult situation of Twitter. Despite its high popularity among users, Twitter continues to experience financial difficulties. Over the years, the company has been “burning” huge amounts of money. For a short period, free cash flow has been positive, but the company still has no profit.

Some Wall Street experts have suggested that the person of Elon Musk can increase user engagement. However, Twitter does not and has had none problems with engagement — the social network remains a popular source of news.

The major problem is the monetization of existing accounts. In particular, Twitter has repeatedly intended to introduce a paid subscription. So far, the new activist investor Musk has not presented his plan to improve Twitter’s financial situation, and his proposal to edit tweets, although expected by users, is unlikely to change the profitability situation in the short term.

Probably, for Elon Musk, the cultural value of Twitter is more important, and its financial situation is a matter of a longer—term perspective.The social network has many opportunities for revenue growth, for example, advertising, subscriptions, NFT, cryptocurrencies and chat. However, the company has not yet realized the commercial potential of these areas. Whether Elon Musk will change something, time will tell.