EXPLAINER: What Elon Musk’s dance with Twitter really means | National News

PROVIDENCE, R.I. (AP) — Tesla CEO Elon Musk’s fantastic Twitter turnabout — in which he disclosed his enormous stake in the social media firm, acquired a seat on its board, publicly floated drastic adjustments and then turned down the board part — all took place in a week.

But its aftermath could linger if the mercurial billionaire who now holds a around 9% stake in Twitter carries on to force ahead his ideas for reshaping the small business of social media.

WHY Did not MUSK Be part of THE BOARD?

Musk stated he informed Twitter on Saturday that he would not be becoming a member of its board of administrators, soon after staying invited five days before, in accordance to a monetary disclosure. He did not make clear why but the Saturday selection coincided with a barrage of now-deleted tweets from Musk proposing big changes to the corporation, this sort of as dropping ads — its main resource of profits — and transforming its San Francisco headquarters into a homeless shelter. Musk remaining a few clues on Twitter about his contemplating, these as by “liking” a tweet that summarized the functions as Musk likely from “largest shareholder for Free Speech” to becoming “told to participate in nice and not talk freely.”

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Twitter CEO Parag Agrawal mentioned Musk’s not signing up for was “for the best” but did not give express good reasons in a assertion Monday. Agrawal also still left some clues, noting that Musk had been awaiting a track record check out and suggesting that Twitter needed him on the board — alternatively than just as a important shareholder — simply because as a fiduciary he’d be legally and ethically sure to act “in the very best passions of the firm and all of our shareholders.”


Musk has been tweeting for a lengthy time, but he started purchasing Twitter inventory in earnest only a several months in the past. He started on Jan. 31, when he bought a little more than 620,000 shares at $36.83 apiece. On virtually just about every solitary investing working day from then through April 1, he purchased hundreds of countless numbers or thousands and thousands additional of shares.

Entirely, Musk was in management of 73.1 million Twitter shares as of the most modern depend, or 9.1% of the business. He spent $2.64 billion shopping for them all on the open sector. The current market worth for all of Twitter, including Musk’s stake, is approximately $38 billion.

HOW Large IS MUSK’S STAKE Compared WITH Others?

Musk appeared to be Twitter’s most significant shareholder until eventually expenditure large Vanguard Team filed a report late very last 7 days exhibiting it experienced supplanted him.

Vanguard controls 10.3% of the business via investments made by its suite of mutual resources and ETFs. Vanguard and other fund giants are generally the biggest investors in any company, as income keeps pouring into their index money from retirement savers and other buyers. But these fund giants are normally a great deal far more hands-off as owners than activist buyers, who can push for new management teams or massive adjustments in technique.


Experienced Musk joined the board, he’d have been only 1 of quite a few voices in approach discussions. And he may possibly have chafed at not staying capable to buy the corporation all around.

“The obligation of the board of administrators is to symbolize the shareholders,” explained Harry Kraemer, clinical professor at Northwestern University’s Kellogg School of Administration and former chairman and CEO of Baxter Worldwide. “They’re not there to signify on their own.”

By turning down a seat on Twitter’s board, Musk also gets out of a assure to keep his ownership stake of Twitter at 14.9% or underneath. Free of that cap, he has the possibility to make a even bigger stake, where by he could consider to choose about the enterprise or help elect a slate of directors additional aligned with his pondering.

“That 15% is an arbitrary amount,” stated Kraemer. “It’s not like if you own 15%, you can or cannot do a thing else. I’m speculating, but it’s possible the thought was: If we provide him on as a director, and he just can’t acquire much more than 15%, that pretty much stops him from taking manage of the firm.”


When Musk first unveiled his Twitter stake through a submitting with the U.S. Securities and Exchange Fee, he did it with a sort of sort generally applied by traders who really don’t approach to press for large modifications at a enterprise. But he has since amended that submitting to use a broader form of sort, just one that doesn’t have the identical limits.


He stated in a filing with regulators on Monday that he owns the shares for “investment applications.” He mentioned he may buy a lot more, sell or basically keep the shares, dependent on what occurs with its selling price and other aspects.

He also stated that he may communicate with Twitter’s board and its administration team from time to time about system, as very well as achievable mergers, revenue or acquisitions, between other matters. The widely adopted tweeter was confident to notice that he could specific his views to the firm “through social media or other channels.”

Musk reported he has “no current options or intentions,” but that his options could adjust at any time.


Substantially of Musk’s vocal criticism of Twitter around recent months has centered close to his belief that it falls limited on totally free speech rules. The social media platform has angered followers of Donald Trump and other considerably-correct political figures who’ve experienced their accounts suspended for violating its material specifications on violence, detest or damaging misinformation. Musk also has a record of his very own tweets leading to legal troubles.

But as prolonged as his consideration is sustained, it can be unlikely that Musk would make this sort of a massive engage in for Twitter if he failed to also have strategic company pursuits, reported Enrique Abeyta, a former hedge fund supervisor and editor of Empire Economic Investigate. It truly is nearly extremely hard to start off a new social media system, so Twitter presents the electronic equal of primary beachfront real estate that just wants some tinkering and contemporary ideas, which could range from getting it non-public to shifting to a membership-centered model with much less speech constraints, Abeyta stated.

“He obviously has revealed an desire in combining his philosophical beliefs and passions with his economic types,” he reported. “I believe it would be pretty risky to lower price him.”


Likely not. Neither Musk — who previously serves as CEO of Tesla and SpaceX and has dabbled in a variety of other technological know-how ventures — nor most buyers are probable to imagine that’s a fantastic thought.

“He’d rather be the chairman, the spirit animal, the man who saved Twitter and also manufactured $10 billion on it,” Abeyta explained. “He’s the richest person in the earth. Currently being CEO sucks.”

Choe described from New York.

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