Twitter CEO Parag Agrawal confirmed on April 10 that Musk would continue to be the company’s largest shareholder, adding that the tech giant will accept his input.
“We were excited to collaborate and clear about the risks. We also believed that having Elon as a fiduciary of the company where he, like all board members, has to act in the best interests of the company and all our shareholders was the best path forward,” Agrawal said in a statement.
He didn’t indicate why Musk changed his mind, but Agrawal told company employees that “there will be distractions ahead but our goals and priorities remain unchanged.”
Musk, who controls a 9.2 percent stake in Twitter, would have officially been appointed to the board on April 9. However, recent regulatory filings showed that he had declined to accept the appointment.
In pre-market trading on April 11, the stock was down as much as 3 percent. Shares quickly turned positive at the opening bell, rallying about 2 percent.
Despite his choice not to become a board member, Musk has remained active on Twitter, posting on the platform how it can improve moving forward.
“The power of corporations to dictate policy is greatly enhanced if Twitter depends on advertising money to survive,” he wrote.
Musk also said Twitter should transform its San Francisco-based headquarters into a homeless shelter “since no one shows up anyway.”
Hostile Takeover?
According to a Securities and Exchange Commission (SEC) filing, the Tesla Motors and SpaceX CEO would be limited to a 14.9 percent stake in the company if he wished to receive a seat on the board.“From time to time, the Reporting Person may engage in discussions with the Board and/or members of the Issuer’s management team concerning, including, without limitation, potential business combinations and strategic alternatives, the business, operations, capital structure, governance, management, strategy of the Issuer and other matters concerning the Issuer,” the SEC filing stated. “The Reporting Person may express his views to the Board and/or members of the Issuer’s management team and/or the public through social media or other channels with respect to the Issuer’s business, products and service offerings.”
The latest developments have triggered speculation that this could be the beginning of a hostile takeover, the start of Musk acquiring a majority stake in one of the world’s largest social media platforms.
With a fortune of approximately $200 billion, and declining a board seat, Musk has a real opportunity to acquire a more significant percentage of the social network, says Aron Solomon, chief legal analyst for Esquire Digital.
“He sees Twitter, in my opinion, as a thing that he enjoys manipulating,” Solomon told The Epoch Times.
“What we also know about Elon Musk from a business perspective is he goes big, or he goes home. So, if he wants to have a role in Twitter, it would seem to me—and a lot of other people who look at this kind of stuff—that he probably wants at some point to have a controlling interest.”
By abandoning this prominent role at Twitter, he can now scoop up as many shares he wants through a legal avenue, “which is much more expedient if he actually wants to control the company,” Solomon said.
“I don’t think that Elon Musk and his goals are necessarily aligned with that of the Twitter board, particularly the current board,” Solomon said.
Baruch Labunski, CEO of Rank Secure, thinks this is now a “relief” for Twitter executives, especially for Agrawal.
“Musk being appointed to the board was setting it up for a showdown between Musk, who is advocating free speech and uncensored voices, against Agrawal, who publicly stated he wants to censor conservatives even more than in the past,” Labunski told The Epoch Times.
“Musk obviously didn’t want dissension to overshadow his quest for serious change on the social media platform. There was already some drama at the company with some employees turning in resignations when it became known that Musk became a majority stockholder. He is carefully picking his battles.”
Investors’ latest bullishness on Twitter could be a sign that the market is responding in a positive manner to a person like Elon Musk arriving and shaking things up in a digital environment that has been stagnating for years, Solomon said.
Others suggest that Musk could implement the change he wishes to see by making his demands public on the microblogging website without the pressures of leadership.
Ali Mogharabi, senior equity analyst at Morningstar, wrote in a research note: “With more than 81 million followers on the platform, Musk could more effectively campaign for changes to the platform without limitations.
“Twitter likely will be pressured to consider his ideas to minimize the risk of losing or aggravating users or pushing Musk to attempt to create a new platform.”
In a recent Morgan Stanley survey of institutional investors and industry experts, 61 percent said that Musk’s primary motivation for his immense stake in Twitter is about “weighing in on free speech ... seeking greater influence on Twitter to preserve his platform.”
Nearly one-quarter (24 percent) purport that the investment decision “may also portend future Tesla strategy around platform/media/content.”
As one study participant told the financial institution, “Everything Elon does is intentional and has a longer-term purpose.”
