David Trainer, CEO of Market Research for New Constructs, joined Closing Bell to discuss the latest in the Elon Musk-Twitter saga, as the deal looks less likely by the day.

Closing Bell

Elon Musk Says Twitter Deal on Hold

Welcome back to cheddar news is closing bell. Everyone, I'm Kristen schueler down here on the floor of the stock exchange and twitter's future with billionaire Elon musk hitting a major road bump. Today must tweeting his deal to buy the platform has been put on hold due to a report about spam accounts. Well, Twitter estimating that false or spam accounts do represent fewer than 5% of its monetize mobile daily active users during the first quarter according to a filing, but that number could be higher. The Tesla Ceo said reading the platform of fake accounts would be one of his top priorities after taking over, although he later said he was still committed to the acquisition. Well, joining me now is David trainer, Ceo of market research for new constructs. David, it's good to have you on the show. What does this latest development tell you about the possibility of this deal actually going through? You know, it's hard to tell with the Elon musk, what's going to happen or not going to happen? I think it speaks to yet another situation where there have been grand promises in the goalpost move and ultimately there are no bottom line results. I think it also speaks to the unwinding, we're seeing, I think maybe the great unwinding, um, since the tech bubble of a lot of really overvalued stocks overvalued people. Uh, and as that unwinds, there are reciprocating effects right as Bitcoin goes down and tether, you know, has a death spiral. People have less worth there and that gives them less leverage or even margin to go to, to enjoy wealth and other places and so selling in a market that's as overvalued and it's highly leveraged as the one we're in right now is going to be get more selling and so I think we're seeing with twitter and musk that hey, he lost a lot of wealth in Tesla uh and maybe he is really stretching the limits of his economic capabilities, uh farther than he feels comfortable and the deal can't get, get done. You know, I, I do think as the world's richest man that he's got a lot of money to play with here, it just depends how badly I think he actually wants twitter, but it is unfortunate because already um in the expectation, as of just two days ago that musk was going to become the new interim ceo of twitter, we have seen a wave of executive departures at the company at twitter at the social media platform, what do you think this means for the platform going forward? I mean, I think a lot of users are scratching their heads wondering is it still worth my time to invest, putting my content and using my voice out there on twitter. Absolutely, I mean it's a clown show, I mean one minute he's gonna take it over and people are leaving and there's all this change and oh sorry, I mean who wants to work for someone like that, right, who wants to live with someone like that, who wants to be friends with someone who's gonna have such wild kind of almost bipolar swings, Yes, I'm gonna buy, you know, I can't and let's face it, like the bots thing everyone knows about the bots. I mean, the bots have been an issue for years, so to use as an excuse as a red flag. I also think the fact that he's looking to do this acquisition to, to invest this much time and energy at precisely the time when Tesla is facing more competition than it's ever faced in the world, right? Or in the history of time. I mean, you know, Volkswagen Mercedes gm for they're all coming online in a big way with clearly very high quality vehicles and they're able to mass produce in a way that Tesla can't, and now musk wants to take his eye off the ball. It's outrageous in my opinion. And I just think people need to see this as a warning sign. Musk may not be the Tony stark. You think he is. There's some patterns of behavior here that, that are alarming. People would point to those behavioral patterns as to reason that they've simply been short Tesla stock for years and have wagered major lawsuits involving the sec against musk and, and Tesla itself, both the company and the founder and Ceo, because he's been known to have swings like this in the past. And whether or not it was nefarious and motive, um, has simply lost people money, um at his own personal gain on the bottom line. Another question that I have here, clearly the stock is falling today as the overall market remains higher. As I see down here on the floor of the stock exchange. But do you think twitter might be a by here? I mean is the company in a better or worse position now knowing that musk might not come in and now suddenly it's lost a whole host of executives, you know, twitter has looked bad dust for a long time and we we put it in the danger zone a while ago, it's look it's a very unprofitable business, um losing cash with still a very expensive valuation even after the price decline. You know, there's been a lot of companies emerged in the last 10, 20 years that have seen very high valuations and have come down a great deal uh and can still come down a lot more. Could go to zero. I don't I'm not saying Twitter's going to go to zero, I'm saying it's still very expensive. They're stuck in this catch 22 where the more they try to monetize the users, the less valuable the platform, right? Think about it when you're using twitter, right? It's sort of instant gratification, you're scrolling information if you're constantly bombarded or interrupted by ads in that process, it's going to lower the value of the platform to you. So the more they try to monetize the less the value the platform and I don't know if there's a way around that for twitter. Okay, interesting. Well when it comes to other social media platforms, does this make them more or less attractive? What's happening on twitter right now? Uh possibly I think in many ways we're moving toward a world where social media becomes increasingly commoditized product. Uh you know, most of the success and social media to to date has really been in their ability to exploit their users to monetize the user's information really without the user's permission or knowledge. Yes, there's some implicit permission and we all signed the terms of agreement etcetera. But the billions and billions that that facebook and even twitter that, that they have generated in revenue is all from their users. Right, monetizing the user's information. I think we're moving more and more toward a world where users are gonna kind of object to that and and take some power back there. And so that social media is more of a utility, a commodity than it is a major profit making enterprise. For the reasons I just mentioned, right, there's a tradeoff right between how much you want to monetize me and how much value I perceive in your platform and as long as it's been done in the shadows, People have been willing to give let people get away with it and it's not not so much in the shadows anymore. Well, let's hope the users can take back some power. I think a lot of users, whether or not they want to say it as certainly would be in that camp as well, David at its David trainer. Ceo of market research from new constructs. David. Thank you.