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Elon Musk Reverses Decision to Join Twitter Board after 9.2% Stock Purchase

UTC by John K. Kumi · 3 min read
Elon Musk Reverses Decision to Join Twitter Board after 9.2% Stock Purchase
Photo: Depositphotos

The Twitter stock surged by 30% after news emerged that Elon Musk had acquired a stake in the company, and another 10% surge came after his appointment to the board was announced. 

SpaceX and Tesla CEO Elon Musk recently purchased 9.2% of the Twitter Inc (NYSE: TWTR) stock to become the largest shareholder of the company. Wall Street considers a stake of less than 10% as passive, however, Musk’s decision was assumed to be an effort to take a more active role on Twitter, especially after criticizing some of its policies in the past.

“I think he intends to go active and force change at Twitter. This is a shot across the bow at Twitter’s board and management team to start discussions,” said Dan Ives, a tech analyst at Wedbush Securities.

Large shareholders have keen interests in the financial growth of a company and are mostly given a seat on the directors’ board to participate in voting and other decisions that control and conduct business.

According to Twitter CEO Parag Agrawal, Musk’s appointment was expected to become effective from April 9, however, he has decided to no longer be part of the board.

“We were excited to collaborate and be clear about the risks. We also believed that Elon as a fiduciary of the company where he, like all board members, has to act in the best interest of the company and all our shareholders, was the best path forward,” said Agrawal.

The Twitter CEO further clarified that Musk’s decision will not make a lot of difference as his input will always be valued as a shareholder of the company.

Criticisms of Twitter by Elon Musk

Elon Musk has been an active user of Twitter and has as well subjected the social media platform to constant criticism. He recently criticized Twitter on how it enforces its free speech principles and even questioned whether it should make its algorithm open source.

On Saturday, he made a couple of Tweets about Twitter and asked if the social media giant is dying. “Is Twitter dying?” He also suggested that Twitter’s San Francisco headquarters should be turned into a homeless shelter since no one shows up anyway.

He further engaged his followers in a poll on whether the “W” in Twitter should be deleted or not. Musk has also suggested that ads should be removed for paying subscribers on Twitter.

The Twitter stock surged by 30% after news emerged that Elon Musk had acquired a stake in the company, and another 10% surge came after his appointment to the board was announced.

His decision to not be part of the board raises questions about his intention of investing in the company. Interestingly, analysts at Bernstein also believe that Musk’s reasons are personal.

“He joins 15+ other billionaires in media ownership, including Bezos with WaPo. We view the interest as a potential distraction for Musk and TSLA shareholders, given that Musk is arguably already over-committed, and his fervor for the topic of censorship/free speech is high,” they stated.

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John K. Kumi
Author John K. Kumi

Excellent John K. Kumi is a cryptocurrency and fintech enthusiast, operations manager of a fintech platform, writer, researcher, and a huge fan of creative writing. With an Economics background, he finds much interest in the invisible factors that causes price change in anything measured with valuation. He has been in the crypto/blockchain space in the last five (5) years. He mostly watches football highlights and movies in his free time.

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