You Can Ignore The Elon Musk And Twitter Drama

Financial media is obsessed with the ongoing saga of Elon Musk versus Twitter TWTR .

The latest development: Twitter filed a lawsuit against Musk yesterday after he announced he was pulling out of the $44 billion deal to buy the company.

This back-and-forth is exciting and entertaining if you enjoy deciphering cryptic texts and tweets from a genius billionaire. It can be quite profitable if you’re a corporate lawyer.

But unless you’re a Twitter shareholder, board member or employee, let’s face it: this is just a distraction.

Why Would Elon Musk Even Want Twitter?

Twitter is the fifteenth most popular social network, according to Statista. Twitter’s 436 million active users are less than Pinterest’s and a fraction of Facebook’s 2.91 billion (data as of January 2022).

Twitter’s latest quarterly report showed $1.2 billion in revenue, compared to Meta Platform’s revenue of $27.91 billion.

Twitter has failed to properly monetize or significantly grow its user base. The attention to Musk’s tweets over the past few months helped drive new users. Otherwise, growth has stalled.

With the broader market slumping this year, Twitter’s market capitalization has dropped to $27.46 billion since news of his $54.20 offer was first reported. Acquisition offers include a premium over the market price, but Musk had second thoughts with Twitter trading in the mid-$30 range.

Tesla TSLA shareholders have also been taken for a ride. When news broke in April that Musk would finance the purchase of Twitter using Tesla shares as collateral for a margin loan, Tesla’s stock dropped 12%.

Skip The Sideshow

Elon Musk is a candle attracting every moth in the media to his brilliant flame. This story generates clicks and attention. Every pundit on CNBC is asked for their opinion on it, even if they’re an analyst covering the consumer staples sector.

As an investor, it’s essential to focus on news that matters most to your portfolio–the Fed, earnings, inflation.

Today’s 9.1% CPI print affects you more than the Musk/Twitter drama. Despite its best efforts this year, the Fed hasn’t tamed spiraling inflation. Higher interest rates are slowing the economy and corporate earnings. That’s the only story that matters.

As for me, I don’t need drama and excitement surrounding my stocks. I just want reliable growth in earnings and dividends. Investing, when done correctly, should be boring.

A lesson learned from this fiasco is the importance of investing in a company with good management. The share price of a well-managed company should be insulated from the whims of one man.

The upcoming courtroom drama of Musk vs. Twitter will make for good television but won’t make you a profit.

Feel free to change the channel.