And just like that, it’s over before it even began.
Elon Musk, the richest man on the planet and an avid poster of Twitter memes, has rejected an offer to be on the board of the social network. The announcement from Twitter’s CEO Parag Agrawal put an abrupt stop to any hope the world had of seeing one of the platform’s biggest provocateurs become part of its management – but it also raised the prospect of a more complete Musk takeover.
“We announced on Tuesday that Elon would be appointed to the board subject to a background check and formal acceptance,” Agrawal said in a corporate briefing he shared. “Elon’s appointment to the board was officially due to take effect on 4/9, but Elon told the same morning that he will no longer be joining the board.”
“Elon is our largest shareholder and we will remain open to his input,” Agrawal added. A Twitter spokesman declined to comment further on the situation. Musk does not have a media representative.
The agreement to add Musk to the board came into being after he acquired a share of 9 per cent in the company to become its largest individual shareholder. Applications to the U.S. Securities and Exchange Commission indicated that the seat came with an agreement from Musk to keep its stake below 15%.
It is not clear what happened in the meantime to derail things. Internally, employees may have brittle by the appointment of a business magnate who has previously used his platform for call people pedophiles, pump peripheral projects on cryptocurrency, get in trouble with the SEC, raising doubts about COVID-19 vaccines and mocking activism for social justice. A recent series of tweets criticizing the company may also have questioned how prepared Musk was to subordinate his own impulses and complain about the interests of the company and its shareholders.
The way forward is just as unclear. Musk seems to still have its significant stake in the company and has not yet done well previous statements by launching its own, competing social network. These scenarios can unfold from here:
Musk pays out
While there is not much to suggest he plans to do so, one option for Musk would be to sell his share of Twitter completely and return to his old relationship with the company: as one of its biggest, loudest users, rather than a co-owner.
Getting involved in the first place may have already intensified his protracted conflict with the SEC after he was late in submitting a required form revealing the purchase of his share. Going away now would save him further headaches while giving him more time to focus on his own businesses, including Tesla and SpaceX.
He would also make a profit if he was able to pay out quickly. Although the news that he is not joining the board caused one short fall in the value of Twitter shares, they still are well over their price before his investment was listed.
An updated SEC form as Musk submitted Monday confirms that after rejecting Twitter’s offer to become a board member, “he may from time to time acquire additional shares of common stock” in the company, leaving the door open for him to exceed the 15 % ownership ceiling he would have met as a board member.
Should he go far enough in that direction or collaborate with other activist shareholders, Musk could exercise his will over Twitter more directly and force changes in management or politics to adapt the platform more to his vision that it is a banned one. free speech zone.
That is a result that financial analyst Dan Ives says could happen. “This is now going from a Cinderella story where Musk joined the Twitter board and kept his share below 14.9% to probably a ‘Game of Thrones’ battle in the coming months,” Ives, CEO of stock analysis at Wedbush Securities, tweeted.
Musk hangs around and plays gadfly
Even without any board space and no changes in its stake in the company, Musk will certainly continue to have many, many opinions about what Twitter is and what it should be. By using the significant power that gave him not only a major shareholder, but also one of the platform’s most popular users – he has more than 81 million followers, whose opinions he regularly obtains through votes in the app – Musk will remain a powerful stakeholder in the company.
In fact, Musk’s new SEC application outlines his freedom to “participate in discussions with the board and / or [Twitter’s] management team “as well as” express their views to the public through social media or other channels. “
Some of the changes he could push for are ideological. Musk in particular has signaled frustration over how the company handles freedom of expression through its content moderation policies. “Given that Twitter acts as the de facto public square, it fundamentally undermines democracy by failing to adhere to the principles of free speech,” he said. tweeted last month. “What needs to be done?”
Other ideas are more evocative of the emotional investment any superuser feels in the product they are obsessed with. Musk has e.g. termed cryptocurrency spambots as Twitter’s “the most annoying problem”, and revived the long-running debate over whether the app should let users edit tweets after posting them (the company has said it is working on such a featurealthough it does so independently of Musk).
He has also said that the company should allow users of their premium “Twitter Blue” subscription to be verified – a sign of legitimacy, connoted with a blue tick, which is currently reserved for politicians, journalists and other public figures.
Musk may be betting that he can better push for this kind of change off the board than inside it.
“He wants as much influence as a shareholder as he would as a director in this situation, simply because of his significant public presence,” said Charles Elson, founding director of the Weinberg Center for Corporate Governance. “At this point, it does not matter whether he is under the tent as director or outside the tent. He has significant … name recognition, public awareness, and what he says about them will have an impact. “
Last week, a Twitter spokesman told The Times that although the board “plays an important advisory and feedback role … the day-to-day operations and decisions are made by Twitter’s management and staff.”
Bloomberg’s Matt Levine, a longtime chronicler of Musk’s intrigue, has also noted that had Musk joined the board, he would have been obligated to act in the best interests of shareholders, rather than simply pursuing his own whims.
Now, Levine wrote Monday, “if Musk wants to change the way Twitter works, he can meet with Agrawal whenever he wants and ask what he wants. If Agrawal says no, he could threaten to buy more shares and take over the company.”