Last week, Tesla Technoking Elon Musk sent shockwaves throughout Wall Street when an SEC filing revealed he’d invested more than $3 billion in the social media platform. Today, reports indicate that he’s changed his mind, deciding to walk away from his seat on Twitter’s board of directors— and if you’re confused, that’s because this is confusing.
Elon’s investment in Twitter was reportedly big enough to give him more than 9% of the company – more than Twitter’s co-founder and ex-CEO, Jack Dorsey, in fact.
“We announced (last) Tuesday that Elon would be appointed to the Board contingent on a background check and formal acceptance,” said Twitter CEO Parag Agrawal, in a memo sent to employees. “Elon’s appointment to the board was to become officially effective 4/9, but Elon shared that same morning that he will no longer be joining the board. I believe this is for the best. We have and will always value input from our shareholders whether they are on our Board or not. Elon is our biggest shareholder and we will remain open to his input.”
Hostility and Distractions Ahead
A seat on Twitter’s board reportedly carries with it a stipulation that would cap ownership at 14.9% of the company’s shares. By rejecting the board seat, Musk is also rejecting that “cap,” leading some industry analysts to speculate that the move could be a preamble to a hostile takeover in the coming months.
That belief seems to be shared by Agrawal, as well, who predicted that “there will be distractions ahead” in this tweet from April 10th.
A bid for a bigger slice of Twitter could come shortly after a proposed Tesla stock split, which would pay a substantial cash dividend to TSLA shareholders— including, of course, Elon Musk, who currently owns about 17% of the electric car company. Such a move would greatly benefit the famously “cash poor” billionaire, who could use the money gained by such a split to fund any ambitions he may have to gain further control over what can and can’t be said on the popular social media platform.
The market overall is down today (so far), so it’s hard to say whether this news is moving Twitter’s stock prices one way or another. One thing, however, is clear: Elon Musk has big plans.
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