Elon Musk made some major (major) news last week when it was announced that he had purchased a substantial stake in Twitter, owning more than 9% of the company’s stock before it was all said and done. This was all seemingly done on the back of Musk criticizing the platform for its free speech practices. Regardless of the motivation, it made major headlines that the (reported) richest person in the world was now going to have a major financial interest in one of the biggest social media platforms. It opened up all kinds of questions about why Musk would make such a move and what his ultimate goal was in purchasing the stock.
After the SEC filings were all dotted and crossed, it was looking like Elon Musk would join the Twitter Board of Directors becoming one of the leading voices for possibly shaping the platform moving forward. Considering the financial stake, this seemed like something of a foregone conclusion and also would have another (possibly) intended side effect of not allowing Musk to acquire more shares of the company. But then, on Monday, the news in the financial sector was that Elon Musk had declined to take the Twitter Board seat though he personally did not give any reasoning behind this move.
Parag Agrawal, the CEO of Twitter who had taken over in recent years for Jack Dorsey, made an announcement, through a Tweet of course, that Elon Musk would not be joining the Board. While the message is mostly corporate in tone, there are undertones here that are hard to ignore. Agrawal discusses how Elon Musk joining the board would have meant him acting in the best interest of shareholders (not happening now?) and that there would be “distractions ahead”. Check out the full message about Elon Musk not joining the Twitter Board.
The speculation about Elon Musk getting into the hostile takeover game when it comes to Twitter stems from this move and the messaging that followed. While neither side has mentioned this explicitly (why would they?), if the main sticking point around the Board seat was the inability to purchase more shares and Musk stepping away from it because it wouldn’t allow him enough control, then it begins to crystalize. And in this sense, the idea of a hostile takeover becomes more palatable. Elon Musk clearly has the wealth to stage such a move. A hostile takeover happens when a person or entity takes a controlling interest in a publicly-traded company without the consent of the company itself. While these numbers aren’t 1:1 in terms of viability, Twitter has a market capitalization of $37 billion while Elon Musk has a reported net worth of around $274 billion (give or take a billion).
With Elon Musk already the largest shareholder, as well as his recent criticisms (or suggestions depending on how you look at them) of Twitter, he might be poised to try and take control of the company in this manner. Musk asked if Twitter is “dying” in a recent tweet, talking about how a lot of the top accounts don’t engage all that much in the platform. He also posted a meme of himself smoking marijuana and saying the next Twitter Board meeting was going to be “lit”. And finally, he immediately started making suggestions about changes to the platform including the implementation of an “edit” button. So the dude clearly has ideas. Now, will he take the next step and just try to own the company? It’s going to be an interesting thing to watch.