Twitter with an Elon Musk issue

SAN FRANCISCO – On a bright and sunny Monday, Elon Musk sent a shocking new document to the government.

In it, the richest man in the world described his possible intentions on Twitter, in which he collected a 9.2% share, explaining how much his position had changed a week earlier.

Mr Musk, if he chooses, can buy more shares of Twitter and expand his ownership of the company, according to the document, which was filed with the Securities and Exchange Commission. He can freely express his thoughts about Twitter on social media or other channels, the document noted. And he reserves the right to “change his plans at any time, as he sees fit.

It was a promise – or maybe it was a threat. In any case, the filing has covered the treacherous situation that Twitter now finds itself in. Mr Musk, 50, one of Twitter’s largest shareholders and one of his most profile users, can very well use the social media platform against him and still buy enough shares. To take over the company.

“Twitter has always suffered more than its fair share of baddies,” said Jason Goldman, who is on the Twitter founder team and has served on its board of directors in the past. “But at least we were not actively being involved by the board members that were using the product we created.”

The filing followed a week of high stakes drama between the billionaire and the company. Last Monday, Twitter revealed that Mr Musk had amassed stock, now raising more than $ 3 billion in the company. A day later, he was invited to the 11-person board of Twitter and agreed that no more than 14.9% of the company should be owned or occupied. Then on Sunday, Twitter suddenly said all those terms were closed and Mr Musk would not be a director.

What happened between Mr Musk, which has more than 81 million followers on Twitter, and company executives and board members is unclear. But it does give Twitter – who has survived founder battles, boardroom uprisings and the annoyance of outside stakeholders – unlike anyone else with an active investor.

Mr Musk, who also heads the electric car maker Tesla and rocket company SpaceX, is known for having unpredictable and outspoken talk, often using Twitter to criticize, humiliate and troll others. By not joining the board, he freed himself from the rules of corporate governance that would require him to act in the best interests of the company and its shareholders.

Mr Musk hid in the liberty when his decision was notified to the company on Saturday morning. He announced on Twitter that he was in “goblin mode” and proposed changes such as opening a San Francisco headquarters to remove “DW” from the company’s name to make it more obscene and to shelter homeless people. He later deleted some of the posts.

“This is not normal activity or, frankly, anything like the activity that we have done before,” said Eli Klein, co-chairman of the Global Shareholder Activism Group at law firm Schulte Roth & Zabel. “Elon Musk doesn’t do things that people already do.”

Patrick Gadsden, another law firm co-head of shareholder activism practice at Vinson & Elkins, said he felt sympathy for Twitter. “I would never want any director that I represent, or any director, to deal with this situation,” he said.

Mr. Musk did not respond to requests for comment. He did not directly address the situation with regard to the Twitter board but liked a tweet in which he suggested that the company want to restrict its free speech rights.

Parag Agarwal, Twitter’s chief executive, pointed out how Mr Musk would have to act as “loyal to the company.” A post On Sunday Twitter, which published Mr. Musk’s biography as a member of its board that still appears late Sunday, declined to comment on Monday.

Credit …Via Twitter

Mr. Musk has long shown great disrespect for corporate governance rules. In 2018, he was charged with securities fraud after allegedly tweeting that he had obtained funds to take Tesla private. Mr Musk later agreed to pay SAC a $ 20 million fine and was separated for three years as Tesla’s chairman.

He also agreed to allow Tesla to review its public statements about the company. But in 2019, the SEC asked a judge to justify violating population terms by issuing a tweet about Tesla incorrectly.

Inside Twitter on Monday, employees were frustrated and upset by Mr Musk’s move, according to half a dozen current and former activists who were not authorized to speak publicly. The billionaire suggested over the weekend that Twitter had changed its headquarters into a homeless shelter because “nobody shows up,” as employees questioned how Mr Musk would know if he was building at some point. Did not visit They also point out that Mr. Musk, whose net worth is over $ 270 billion, could easily afford to help San Francisco’s homeless people.

Others said they were angry at Mr Musk’s tweets criticizing the company’s product and business models, noting that he didn’t value the time and thought that Twitter’s services were updated for many years and that he was off the road. No map info was available. Some employees said they were pleased to read that Mr Musk would not join the board of directors, according to people who saw internal communication on Twitter.

When it was still revealed that Mr Musk would be on the board, Mr Agarwal set up a question-and-answer session for Mr Musk to address employees’ concerns. The session has been canceled, said one person with knowledge of the decision.

Mr Musk’s insistence is for the second time in two years that Twitter has dealt with an active investor. In 2020, investment firm Elliott Management accumulated a 4% stake and used its position to push for changes, including hiring Jack Dorsey as chief executive and more aggressive financial development. Mr Dorsey resigned in November.

Following the common formula for investors who follow Elliott’s point: Get a significant stake in a company and then push for governance and strategy changes to increase stock prices.

“Usually an activist is very clear in their intentions,” said Rich Greenfield, an analyst with LightShade Ventures, a venture capital investment fund. But “we don’t know what the true motivation for Elon Musk is. Is this Elon enjoying it? Is this Elon trying to influence change? Is Elon trying to drive the stock further?

Twitter is especially sensitive to activists, analysts said, because its founders did not structure the company’s shares in a way that would give them more control. Google and the founders of Facebook have retained voting power over shares, giving them a greater grasp on the direction of their companies.

Natasha Lamb, a managing partner at Arjun Capital, an active investment firm that owns some Twitter stocks, said Mr Musk was taking a more casual approach than other active investors.

“Musk is using Twitter to voice his opinion, but this is not a basic activity,” he said. “It shows what he does for fun.”

For Mr. Musk, the taste may be less for Twitter. The relief between Twitter employees that he is no longer on the board for a short time, said current and former employees, when they felt he was no longer obliged to buy the stock or take over the company.

Mr Musk could continue to play with Twitter, as current and former employees said they felt. Many added that they were scared of what could happen next.

Loren Hirsch Contributed Reporting.

Leave a Comment