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Why Did Musk Rebrand Twitter?

Plus500 | Tuesday 25 July 2023

After about 13 years of using its iconic blue bird logo, social media giant Twitter rebranded itself as “X.” The shocking revelation came in on Sunday, July 23rd, as Twitter’s controversial owner, executive chair, and CTO, Elon Musk tweeted that soon Twitter “shall bid adieu to the Twitter brand and, gradually, all the birds.” In addition, the domain “x.com” now redirects to Twitter.

But why would Musk take such drastic measures given that a company’s logo and name may arguably be one of the most important aspects of its image and identity and what could this mean for rival Meta’s (META) new app “Threads” which is supposedly Twitter’s biggest competitor?

Here’s what you need to know about Twitter’s rebranding, what it might mean for its business model, how it might affect Meta’s Threads App, and what experts and customers seem to think about it:

An image of Twitter's new logo

The Goals Behind this Shift

Musk, who has taken over Twitter last year has been adamant about shifting the company to a “super app” or an “everything app.” As the name may entail, a super app is either a mobile or a web application that provides users with multi-services which may include social media networking, banking, messaging, e-commerce, and more. 

A famous example of a super app may be Chinese tech giant, Tencent’s (0700.HK),  WeChat app which offers its users the ability to network, conduct payments, send messages, and more.  As such, Musk aims to transform Twitter from a social media platform to a super app that would allow users to enjoy functions similar to China’s WeChat. 

Twitter’s CEO, Linda Yaccarino, revealed in a Tweeted she posted on Sunday that the X app will be "centered on audio, video, messaging, payments/banking.” In addition, she mentioned that it will be “powered by AI, X,” and “will connect us all in ways we’re just beginning to imagine.”

To exacerbate this shift, Musk also tweeted on Monday, July 24th, that the famously called “Tweets” will now be called “X’s.” 

But Why the Mere X?

Out of all the letters of the alphabet, some may be wondering why Musk chose the letter X. While there’s no black-or-white answer to this, it appears that Musk has been enamored with this letter for quite some time now. 

Evidently, Musk initially named his first startup X.com, which later on became PayPal (PYPL) after a merger. Moreover, following the completion of his $44 billion purchase of Twitter back in October 2022, Musk reportedly texted American biographer and journalist, Walter Isaacson, that he is “very excited about finally implementing X.com as it should have been done, using Twitter as an accelerant!”

Additionally, it is no secret that one of Musk’s biggest companies, SpaceX, also reflects the business mogul’s infatuation with the letter X and some of Musk’s EV company, Tesla’s (TSLA), most famous cars are called “Model X.” Musk also recently dabbled into the AI hype by launching the xAI artificial intelligence startup. 

What Might this Mean for Twitter?

Twitter, which has already been suffering from loss of advertisers, financial woes, and revenue losses this year, may now be under the scrutiny of some experts that seem apprehensive about the future of Twitter following the rebranding. 

Some analysts claim that this rebranding is “extremely risky,”, especially at a time when more companies are creating apps (like Meta’s Threads) to contend with Twitter. They also believe that Musk’s move “singlehandedly wiped out over fifteen years of a brand name that has secured its place in our cultural lexicon.”

Furthermore, some believe that this shift could confuse Twitter’s users and, as a result, also makes it harder to attract advertisers to the platform. 

On the flip side, some analysts think that making Twitter an app that also includes e-commerce and paid subscription content could actually aid the company’s business and make it “less reliant on large companies’ willingness to spend money.” 

Either way, it is important to keep in mind the fact that such a transition would require a great amount of capital as the company would have to spend billions of dollars on cloud infrastructure as well as staff.

How Is Rival Meta Faring in the Midst of Twitter’s Buzz?

Social media behemoth, Meta, launched the Threads App on July 5th and made a notable buzz on the news as many deem the app the “Twitter Killer,” and has gained over 70 million sign-ups in less than two days. (Source:The New York Times)

However, ever since its emergence, it seems that the hype surrounding Threads may have dwindled as the app lost a whopping 70% of active users recently. This means that the app dropped from 44 million users to 13 million.  In comparison, Twitter, or X, has an active user base of about 200 million people. 

Nonetheless, some say that it may be too soon to underestimate Meta’s Threads App since it is still relatively incomplete, new to the market, and hasn’t launched in the EU yet.  As such, some believe that Threads may still pose a threat to Twitter and still has some potential to go. But whether or not these hopeful predictions will hold true is yet to be determined. 

It may also be interesting to note that Meta and Microsoft (MSFT) seem to already have intellectual property rights to the X logo which could complicate things for Twitter. In addition, this letter is used often in trademarks and may pose legal issues for Twitter in the future.  According to trademark attorney, Josh Gerben, “there’s a 100% chance that Twitter is going to get sued over this by somebody.” Still, some believe that in the meantime the chances of Microsoft and Meta suing Twitter now may be low, but they may do it if they feel threatened by Twitter’s equity. 

Conclusion 

It seems that Twitter’s rebranding has shocked many and as it is still a relatively new topic, the effects of this shift on Twitter’s business and success are yet to be seen. Customers, traders, and analysts alike may want to keep an eye out for any app developments or changes that may reflect this rebranding in order to see how it might affect the company as well as its competitors like Meta. 

Interestingly enough, while Twitter may be shifting away from its famous text content Chinese social media giant, TikTok announced on Monday that it would allow its users to create “text-based content,” as it aims to expand “the boundaries of content creation for everyone on TikTok.” 


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