Elon Musk, Twitter’s largest investor, is reversing course and will no longer serve on the company’s board of directors less than a week after being appointed.
Following a weekend of Musk tweets hinting at changes to Twitter, including making the service ad-free, Twitter Chief Executive Parag Agrawal announced the announcement. Ad revenue accounted for about 90% of Twitter’s revenue in 2021.
However, many of Musk’s comments about potential Twitter changes have vanished from the network over the weekend.
“Elon’s appointment to the board was set to take effect on 4/9. However, Elon announced that same morning that he would not be joining the board,” Agrawal said in a reposted email to Tesla staff. “This, I suppose, is for the best.”
Musk’s apparent decision was left unanswered by Agrawal. He claimed the board was aware of the dangers of having Musk on board, who is now the company’s largest shareholder. However, he stated that “having Elon as a fiduciary of the company, where he, like all board members, is required to act in the best interests of the company and all our shareholders, was the best road ahead.”
Musk’s tumultuous connection with Twitter began precisely one week ago when regulatory filings disclosed that the erratic billionaire had amassed a 9.2 percent stake in the social media platform, making him the social media site’s largest shareholder.
According to a regulatory filing, Twitter awarded Musk a seat on the board because he did not control more than 14.9 percent of the company’s outstanding stock.
While Musk has been a vocal critic of Twitter, his unexpected departure from the board, which was announced on Saturday, could signal that the rapidly emerging storyline between Musk and Twitter could get more acrimonious.
“This has gone from a Cinderella story with Musk joining the Twitter Board and keeping his stake under 14.9 percent to likely a “Game of Thrones” battle between Musk and Twitter with the high likelihood that Elon takes a more hostile stance towards Twitter and further builds his active stake in the company,” wrote Daniel Ives, who follows Twitter for Wedbush.
According to Ives, this might suggest that Musk would team up with another prominent investor to compel “strategic changes at Twitter” or that he will try to sway board members and management to shift course.
“There will be distractions ahead,” Agrawal wrote to staff, “but our aims and priorities remain unchanged.”
Twitter Inc. shares sank about 2% at the opening bell Monday after jumping over 30% after Musk’s investment became public last week.
Late Sunday, Musk sent out a series of mysterious tweets, including one with a meme that said, “In all fairness, your honor, my client was in goblin mode,” and another that said, “Explains everything.” An emoji with a hand over its mouth was used in a later message.
As Twitter’s largest shareholder, he now owns 9.2 percent of the company, prompting doubts about how he might try to restructure the social media network.
Musk is one of the most famous figures on Twitter, with 80.5 million followers, rivaling music singers like Ariana Grande and Lady Gaga. However, his frequent tweeting had gotten him into problems, including when he used it to promote his commercial enterprises, mobilize Tesla supporters, dispute pandemic precautions, and start arguments.
Musk, for example, apologized to a British cave explorer who claimed Musk had labeled him a pedophile in an angry — and later deleted — tweet by referring to him as “pedo man.” The explorer sued Musk for defamation, but a jury in Los Angeles subsequently found Musk not guilty.
He’s also been embroiled in a long-running legal battle with the Securities and Exchange Commission over his use of Twitter. After Musk tweeted about having the money to take Tesla private for $420 per share, Musk and Tesla agreed to pay $40 million in civil fines and have Musk’s tweets vetted by a corporate counsel in 2018. Although this did not materialize, Tesla’s stock price rose due to the tweet. Musk’s counsel has claimed that the SEC intrudes on his right to free expression.
Musk has defined himself as a “free speech absolutist” who believes Twitter is not upholding free speech values, an opinion echoed by Donald Trump supporters and other right-wing political personalities whose accounts have been terminated for breaking Twitter content guidelines.
But it’s unclear what’s indeed fueling Musk’s Twitter activity. Other Twitter-related concerns include pushing for public access to Twitter’s algorithm, expanding the availability of “verified” Twitter accounts, and decrying a profile photo scheme employing non-fungible tokens, or NFTs.
“Crypto spam bots,” which scour tweets for cryptocurrency-related terms before posing as customer service to empty users’ crypto wallets, have been dubbed the “most frustrating thing on Twitter” by Musk.
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Musk has been complimented by Twitter’s CEO and other board members, indicating that they may take his ideas seriously.
Since taking leadership from co-founder Jack Dorsey in November, Agrawal’s first actions have rearranged departments without making significant changes. The startup has traditionally trailed its social network competitors with much fewer subscribers.
