And identical to that, it’s over earlier than it even started.
Elon Musk, the richest man on the planet and an avid poster of Twitter memes, has declined a proposal to affix the board of the social community. The announcement from Twitter Chief Govt Parag Agrawal put an abrupt finish to any hopes the world had of watching one of many platform’s greatest provocateurs turn into a part of its administration — but it surely additionally raised the prospect of a extra full Musk takeover.
“We introduced on Tuesday that Elon could be appointed to the board contingent on a background examine and formal acceptance,” Agrawal said in an organization briefing he shared. “Elon’s appointment to the board was to turn into formally efficient 4/9, however Elon shared that very same morning that he’ll not be becoming a member of the board.”
“Elon is our greatest shareholder and we are going to stay open to his enter,” Agrawal added. A spokesperson for Twitter declined to remark additional on the state of affairs. Musk doesn’t have a media consultant.
The deal so as to add Musk to the board took place after he acquired a 9% stake within the firm to turn into its greatest particular person shareholder. Filings with the U.S. Securities and Change Fee indicated that the seat got here with an settlement by Musk to maintain his stake beneath 15%.
It’s not clear what occurred within the interim to derail issues. Internally, workers could have bristled on the appointment of a enterprise magnate who has beforehand used his platform to name folks pedophiles, pump fringe cryptocurrency tasks, get in hassle with the SEC, increase doubts about COVID-19 vaccines and mock social justice activism. A latest collection of tweets criticizing the corporate could have additionally referred to as into query how ready Musk was to subordinate his personal impulses and grievances to the pursuits of the corporate and its shareholders.
The trail ahead is equally unclear. Musk appears to nonetheless have his sizable stake within the firm, and hasn’t but made good on past intimations at launching his personal, competing social community. These are the eventualities that would unfold from right here:
Musk cashes out
Though there’s little indication that he plans to take action, one possibility for Musk could be to promote his stake in Twitter altogether and return to his outdated relationship with the corporate: as certainly one of its greatest, loudest customers, slightly than a co-owner.
Getting concerned within the first place could have already heightened his long-running battle with the SEC after he was tardy submitting a required type disclosing the acquisition of his stake. Strolling away now would save him additional complications, whereas additionally giving him extra time to deal with his personal corporations, together with Tesla and SpaceX.
He’d additionally flip a revenue have been he in a position to money out shortly. Though the information that he isn’t becoming a member of the board did trigger a transient drop within the worth of Twitter shares, they’re nonetheless properly above their worth earlier than his funding went public.
Musk doubles down
An up to date SEC type that Musk filed Monday reaffirms that after he declined Twitter’s provide to affix the board, he “could, on occasion, purchase extra shares of Frequent Inventory” within the firm, leaving the door open for him to exceed the 15% possession cap he would’ve confronted as a board member.
Had been he to go far sufficient in that path, or associate with different activist shareholders, Musk may exert his will over Twitter extra immediately, forcing adjustments in management or coverage to align the platform extra together with his imaginative and prescient for it as a no-holds-barred free-speech zone.
That’s an final result monetary analyst Dan Ives says may occur. “This now goes from a Cinderella story with Musk becoming a member of the Twitter board and holding his stake beneath 14.9% to seemingly a ‘Sport of Thrones’ battle within the months forward,” Ives, managing director of fairness analysis at Wedbush Securities, tweeted.
Musk hangs round and performs gadfly
Even with no board seat and no adjustments to his stake within the firm, Musk will definitely hold having many, many opinions about what Twitter is and what it must be. Utilizing the appreciable energy afforded him as not only a main shareholder but additionally one of many platform’s hottest customers — he has greater than 81 million followers whose opinions he repeatedly solicits by means of in-app polls — Musk will stay a strong stakeholder within the firm.
Certainly, Musk’s new SEC submitting outlines his freedom to “interact in discussions with the board and/or [Twitter’s] administration group” in addition to “specific his views to … the general public by means of social media or different channels.”
A few of the adjustments he may push for are ideological. Particularly, Musk has signaled frustration with how the corporate handles free speech through its content material moderation insurance policies. “Provided that Twitter serves because the de facto public city sq., failing to stick to free-speech ideas essentially undermines democracy,” he tweeted final month. “What must be executed?”
Different concepts are extra evocative of the emotional funding any super-user feels within the product they’re obsessive about. Musk has labeled cryptocurrency spambots Twitter’s “single most annoying drawback,” for example, and reignited the long-standing debate about whether or not the app ought to let customers edit tweets after posting them (the corporate has mentioned it’s engaged on such a function, albeit doing so unbiased of Musk).
He has additionally mentioned the corporate ought to let customers of its premium “Twitter Blue” subscription get verified — a mark of legitimacy, connoted with a blue check-mark, that’s at present reserved for politicians, journalists and different public figures.
Musk could also be betting that he can higher push for these kinds of adjustments from exterior of the board than inside it.
“He’ll have as a lot affect as a shareholder as he would as a director on this circumstance, merely due to his vital public presence,” mentioned Charles Elson, founding director of the Weinberg Middle for Company Governance. “At this level, it doesn’t matter whether or not he’s beneath the tent as a director, or exterior the tent. He has vital … identify recognition, public consideration, and what he says about them can have affect.”
Final week, a Twitter spokesperson instructed The Occasions that though the board “performs an essential advisory and suggestions function … each day operations and choices are made by Twitter administration and workers.”
Bloomberg’s Matt Levine, a longtime chronicler of Musk’s machinations, has additionally famous that had Musk joined the board, he would’ve been obliged to behave in shareholders’ greatest pursuits, slightly than simply pursuing his personal whims.
Now, Levine wrote Monday, “if Musk needs to vary how Twitter operates, he can get a gathering with Agrawal at any time when he needs, and ask for no matter he needs. If Agrawal says no, he can threaten to purchase extra inventory and take over the corporate.”