And just like that, it’s over before it even started.
Elon Musk, the richest man on the planet and an avid poster boy for Twitter memes, has declined an offer to join the board of directors of the social network. Twitter’s chief executive Parag Agrawal’s announcement put an abrupt end to any hope the world had of seeing one of the platform’s biggest provocateurs on its board, but it also raised the prospect of a fuller takeover of Musk.
“We announced on Tuesday that Elon would be appointed to the board subject to background checks and formal acceptance,” Agrawal said. mentioned in a company briefing he shared. “Elon’s appointment to the board was scheduled to officially become effective on 9/4, but Elon shared that 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 spokesperson declined to comment further on the situation. Musk does not have a media representative.
The deal to add Musk to the board came after he took a 9% stake in the company to become its first individual shareholder. Filings with the U.S. Securities and Exchange Commission indicated the seat came with an agreement from Musk to keep his stake below 15%.
It’s unclear what happened in the meantime to derail things. Internally, employees may have bristling to the appointment of a business tycoon who has already used his platform to call people pedophiles, pump fringe cryptocurrency projects, to have troubles with the SEC, raise doubts about COVID-19 vaccines and mock social justice activism. A recent series of tweets criticizing the company may also have called into question Musk’s readiness to subordinate his own impulses and grievances to the interests of the company and its shareholders.
The way forward is equally unclear. Musk still seems to have his big part in the business and has yet to succeed past hints to launch its own competing social network. Here are the scenarios that could unfold from here:
Musk cashes in
Although there are few indications that he plans to do so, one option for Musk would be to sell his stake in Twitter completely and return to his old relationship with the company: as one of his largest and loudest users, rather than as a co-owner.
Getting involved in the first place may have already exacerbated his longstanding conflict with the SEC after he delayed filing a required form disclosing the purchase of his stake. Stepping away now would save him more 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 cash in quickly. Although the news that he is not joining the board has caused a brief fall in the value of Twitter shares, they are always well above their price before his investment is made public.
A updated SEC form Musk filed Monday reaffirms that after declining Twitter’s offer to join the board, he “may, from time to time, acquire additional common stock” in the company, leaving the door open for him to move on. the 15% ownership cap he would have faced as a board member.
If he goes far enough in that direction, or if he joins forces with other activist shareholders, Musk could exert his will on Twitter more directly, forcing management or policy changes to bring the platform more in line with its vision as an unrestricted platform. free speech zone.
According to financial analyst Dan Ives, this is an outcome that could happen. “It now ranges from a Cinderella story with Musk joining Twitter’s board and keeping his stake below 14.9% to likely a ‘Game of Thrones’ battle in the coming months,” Ives, director general of equity research at Wedbush Securities, tweeted.
Musk hangs out and plays horsefly
Even without a board seat and change in his stake in the company, Musk will certainly continue to have many, many opinions about what Twitter is and should be. Using the considerable power vested in him as a major shareholder, but also one of the platform’s most popular users – he has over 81 million subscribers whose opinions he regularly solicits through in-app polls – Musk will remain a powerful player in the business.
Indeed, Musk’s new filing with the SEC describes his freedom “to engage in discussions with the board of directors and/or [Twitter’s] the management team” as well as “to express its point of view to the public through social media or other channels”.
Some of the changes he might ask for are ideological. In particular, Musk flagged his frustration with how the company handles free speech through its content moderation policies. “Given that Twitter serves as the de facto town square, failure to uphold the principles of free speech fundamentally undermines democracy,” he said. tweeted last month. “What should be done?”
Other ideas are more evocative of the emotional investment any superuser feels in the product they’re obsessed with. Musk called cryptocurrency spambots Twitter’s “most annoying problem,” for example, and reignited the long-running debate over whether the app should allow users to edit tweets after they’ve been posted. published (the company said it was work on such a featurebut independently of Musk).
He also said the company should let users of its premium “Twitter Blue” subscription get verified – a mark of legitimacy, connoted by a blue tick, that is currently reserved for politicians, journalists and other public figures.
Musk may be betting he can push for these kinds of changes better from outside the board than from inside.
“He will have as much influence as a shareholder as he would as a director in these circumstances, simply because of his significant public presence,” said Charles Elson, founding director of the Weinberg Center for Corporate Governance. “At this point, it doesn’t matter if he’s in the tent as a director or outside the tent. He’s got a lot of notoriety, audience attention and what he says about them will have an influence.
Last week, a Twitter spokesperson told The Times that while the board “plays an important advisory and feedback role…day-to-day operations and decisions are made by Twitter management and employees.”
Bloomberg’s Matt Levine, a longtime columnist of Musk’s machinations, 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 On Monday, “If Musk wants to change how Twitter works, he can get a meeting with Agrawal anytime he wants and ask what he wants. If Agrawal says no, he can threaten to buy more shares and take over the company. ‘business.