The CEO of Twitter knows that this will not be the end. Announcing that Elon Musk will not join the company’s board, Parag Agraval wrote: “There will be distractions ahead.
Interference is hard to avoid when one of your biggest shareholders has more than 80 million followers on your platform and a tendency to impulsively use the tweet button. Ever since it became clear last Monday that the world’s richest man controls 9.2% of Twitter, Musk has justified his reputation for shooting first, ask later.
In a stream of posts, some of which have been deleted, Musk noted a number of potential changes to the platform. As is often the case with Tesla’s CEO, it was difficult to separate visionary business direction from mischief.
Among the removed tweets was a suggestion that the first-class Twitter service should be done without ads. This paved the way for a heretical business that makes 90% of its annual advertising revenue of $ 5 billion (£ 3.8 billion). Musk’s rationale for such a move was characteristically harsh: “The power of corporations to dictate policy increases significantly if Twitter depends on advertising money to survive.”
According to Agraval’s reference to distractions, just because Musk no longer joins the Twitter board does not mean that he will fade into the background. This is not Musk’s style, a point reinforced by his documents to US financial supervision related to investment. Last Monday, he announced the disclosure of his stake in the US Securities and Exchange Commission with a 13G schedule, which is for passive investors who are not preparing to shake the business in question.
The next day he presented it as a 13D chart, for investors who intend to play an active role. As a board member, Musk’s share would be limited to 14.9%, but no more. He has since completed 13D again, with an amendment noting that he can express his views on the company “through social media”.
Dan Ives, managing director of US investment firm Wedbush Securities, said he believed the Twitter board and Musk could not reach an agreement on how the billionaire communicates with the public about the company, given that the board’s position implies more measured position.
This now comes from the story of Cinderella with Musk joining the Twitter board and keeping her share below 14.9%, helping Twitter move strategically forward toward a possible Game of Thrones battle between Musk and Twitter “Ives said. He added that there was a “high probability” that Elon would take a more hostile stance towards Twitter and further build his stake.
Twitter has become accustomed at least to activist investors after negotiating a deal with US investment firm Elliott Management in 2020, which includes attracting a new investor, private investment firm Silver Lake, both of whom are meeting. Elliott retains a 1.25% stake in Twitter. It also turned out that Vanguard, an asset manager in the United States, is now the largest shareholder on Twitter with a 10.3% stake, ending Musk’s brief tenure as the largest investor, although he remains the largest individual shareholder.
Shareholders’ reaction to the acquisition of a stake in Musk and his subsequent appointment to the board showed excitement at a potential $ 37 billion shake-up or sale of the company as shares rose 17% last week. Twitter’s problems are long-standing and focus on the slow growth of both revenue and subscriber numbers. In its most recent quarterly results, revenue grew slower than expected, despite a 22% increase to $ 1.6 billion in the last three months of 2021. However, daily active users grew by $ 25 million during the year to $ 217 million as the company repeated its goal of reaching 315 million such users by the end of next year.
One of Musk’s undeleted tweets over the past seven days reflects investors’ concerns about growth. Posting a list of the top 10 Twitter accounts, which includes his own and led by Barack Obama, Musk said most accounts rarely tweet and post little content, adding: “Is Twitter dying?”
The reference to corporate mortality is a typical hyperbole of Musk, but he expressed fears of growth, which were thrown in sharp relief from the march of rivals such as TikTok.
Given the competition and impatience of investors, Twitter has made changes in the last year. In addition to exploring ways to make the site less confrontational, it has introduced new features such as Twitter Blue, its first-class $ 2.99 service per month that gives users a 30-second tweet editing window before appearing online. Blue is available in the United States, Canada, Australia and New Zealand.
Agrawal’s predecessor, Jack Dorsey, also supported Musk’s call for Twitter users to be able to decide which algorithm to use to manage their experience on the platform, or to build their own.
One of Musk’s ideas last week was backed by the world’s second-richest man, Jeff Bezos. The founder of Amazon, in response to a subsequently deleted Musk poll asking if Twitter should turn its headquarters into a homeless shelter, tweet link to an article about an asylum on the Amazon campus in Seattle. answering Musk tweeted: “Great idea.”
For a corporate governance expert, the main problem with Musk’s joining Twitter is the timing and the electric car company he chairs. “He runs Tesla. He doesn’t have time for Twitter. His job at Tesla is not easy and he receives huge sums of money to be there, “said Charles Elson, founder of the Weinberg Center for Corporate Governance at the University of Delaware. Musk is also the CEO of the SpaceX space rocket company.
Elson added that Musk, a Twitter account that is ready, will remain highly influential outside the boardroom.
“Honestly, he has just as much influence where he is.”