What a Musk Twitter acquisition could mean for the social media stocks that are left

Published Mon, Apr 25 20222:46 PM EDTUpdated Mon, Apr 25 20226:06 PM EDT

Elon Musk won his fight to take Twitter private and some analysts think the deal could offer unique benefits to some of the biggest social media stocks still left in public markets. Twitter's board on Monday approved Musk's offer to take the company private at $54.20 a share , with analysts anticipating the social media giant wanted to finalize a deal before it reports disappointing quarterly results on Thursday. While Twitter generally doesn't compete with the likes of Meta 's Facebook, Alphabet and Snapchat, Benchmark Company's Mark Zgutowicz says the deal could lead Twitter shareholders looking for new social media investments to dip into Alphabet. "Google is your safest play in terms of ad tech platforms that are unencumbered by Apple 's increasing privacy restriction," he said, adding that many small businesses have already moved advertising dollars from Facebook into Google Search and YouTube which offer more stable returns. Zgutowicz also thinks Snapchat is another potential beneficiary of a market shift although it continues to work through iOS issues. Among his plans for Twitter, the Tesla CEO wants to be able to speak more freely on the platform and previously said the company can "neither thrive nor serve" free speech in its current state. Prior to the deal, Musk mentioned in March that he was giving "serious thought" to building a new platform, claiming that Twitter does not allow for free speech. On the tech policy front, New Street Research's Blair Levin thinks Alphabet and Meta can benefit from the deal, saying in a note Sunday that he is also skeptical of how Twitter can make money as an open platform. "Musk taking over Twitter is also good for Meta and Alphabet in the sense that Twitter will become the target for public debates over social media," Levin wrote. "The Haugen disclosures and other such problems are likely to fade from media and the public attention as the spotlight focuses on what Musk is and is not doing with his platform." He was referencing the disclosures in 2021 by Frances Haugen, the ex-Facebook employee whose testimony to Congress hurt the reputation of the social media giant. Meanwhile, shares of Digital World Acquisition Corp., the SPAC attempting to take Donald Trump 's social media project, plummeted 13% on Monday. The company is being offered up as an alternative to Facebook and Twitter, which banned former President Donald Trump after the Jan. 6 riot. Zgutowicz says the take-private deal likely won't lead to a chain reaction of privatization in the social media sector, nor will it hit engagement or force Google and Facebook to immediately become less restrictive in how they manage their content. "Time will tell," he said. "I don't see Facebook and Google really changing their stripes much until they actually see people demand it and start to see a loss of engagement."

A Twitter logo is seen on a computer screen in this photo illustration on October 30, 2017.

NurPhoto | Getty Images

Elon Musk won his fight to take Twitter private and some analysts think the deal could offer unique benefits to some of the biggest social media stocks still left in public markets.