Why did Elon Musk join the Twitter board?
The move from passive shareholder to board member is a huge step for Musk, whose shares are currently more than four times those held by the company's founder , Jack Dorsey (Musk's stake was only made public on Monday, past the deadline set by the U.S. stock exchange regulator, a fact that experts say would be a blatant violation of U.S. finance laws). Musk's move has also led many to wonder what the future of Twitter will be.
Elon Musk is already weighing his role as Twitter's largest shareholder From conservative user requests to rehabilitate Donald Trump's profile to possibility to insert a tweet editing function, Musk seems interested in having an active role in the management of the social network Musk joined Twitter in June 2009, accumulating 80.7 million followers to date. Despite his popularity, however, he has proven to have a long-standing love-hate relationship with the platform. In July 2016, Musk professed his love for Twitter. Then, in February 2017, he described the app as "a hellish place full of hater". In December 2017, he loved her again. In February 2019, in a reply to Jack Dorsey, he wrote that "Twitter rocks", only to post in July 2020 that Twitter "sucks", a few months after writing that Dorsey was a good-hearted person.
Musk's fluctuating relationship with Twitter does not help explain the reasons that led him to buy a stake in the company and join the board of directors, even if theories are not lacking. Musk did not respond to a request for comment from sportsgaming.win UK for this article.
An indication could come from his most recent tweets. The entrepreneur has long expressed himself very freely on the platform; in 2018 Musk wrote: "My tweets literally represent what I am thinking at any given moment, they are not carefully packaged corporate bullshit, which is just banal propaganda".
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Politics and freedom of expression Musk's latest tweets have been about the future direction of Twitter. Since acquiring a stake in the company, Musk has been asking his followers with some polls if Twitter should let him become his open source algorithm and if they felt the platform adheres to the principle of freedom of expression. Musk also wrote in response to another user that he was concerned about the effects of Twitter's algorithm on public debate.
Musk's rhetoric has fueled the hopes of American right-wing politicians who have been kicked off the platform or believe their colleagues have been censored, while alarming people who fear that Twitter's strides in cracking down on hate speech could now be canceled.
"It's pretty obvious that the Elon's interest is free speech - explains cryptocurrency investor Maya Zehavi, who has held shares in Twitter since 2019 - I think he'll probably try to leverage his power on the board to make sure Twitter doesn't try to enforce rules. on censorship stricter than necessary ". The reasoning also holds true for Adam C. Pritchard, a University of Michigan law professor who specializes in corporate and financial securities law. "I don't think there is much mystery as to why he made the investment - says Pritchard -. His tweets suggest he thinks he has ideas that could improve Twitter".
WiredLeaks, how to send us an anonymous report Shareholder-activists, a category Musk can be assumed to fall into in this case, generally buy stakes for three reasons, explains Anil Dash, CEO of software development startup Glitch: to divide the company into different units - one a move that according to Dash would not make sense for Twitter - to appoint a CEO under its control (an eventuality that Dash does not rule out), or to obtain a dividend. The latter option is to be discarded, however, since Twitter is not making any profits yet: "Musk is not aiming for any of these things, and so he just wants to make sure he has a privileged position on the platform, and then try to report fascists like Trump [Donald, the former president of the United States, who was expelled from Twitter, ed], "says Dash.
Twitter spokesperson Adrian Zamora says the platform is committed to being impartial in development and in the application of its policies and rules. "Our decisions are not determined by the board or the shareholders, and we have no intention of reversing any decisions - explains Zamora -. As always, our board plays an important advisory and feedback role for our service." Zamora adds that the day-to-day business and decisions of the company rest with the management and employees.
The battle with the Sec A further clue could be the percentage of shares Musk bought, just under ten percent . For the Securities and Exchange Commission (SEC), the independent agency of the United States that monitors the stock exchange, anyone who owns more than ten percent of any class of stock is considered an "insider", and is therefore subject to much scrutiny. more stringent. The SEC has already turned its attention to Musk in the past, accusing him of defrauding investors for tweeting that he obtained the necessary funding to withdraw Tesla from the stock market in 2018, eventually reaching an agreement after suing him. The deal also stipulated that Musk was required to obtain approval for some tweets related to his financial activity prior to publication.
Other elements under Musk's new Twitter deals - including his entry into the board of administration - however, they expose him to other rules of the Sec. A rule known as the short-swing profit rule would force Musk to forgo potential profits if he were to abandon the investment before six months (when Musk announced that he had bought shares of Twitter, the price rose from $ 39.30 to a high of $ 53.84 per share). However, the documentation filed by Twitter with the SEC, in addition to confirming his entry on the board of the company, shows that Musk's tenure as a director is two years, which would prevent him from artificially raising the price of Twitter's shares. to then resell them and make a profit, a practice known as pump and dump.
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Arrow The documentation filed with the SEC reveals an interesting detail, however: Musk cannot hold more than 14.9 percent of Twitter's shares in the period in question. who will sit on the board of directors of the company and for the following ninety days. According to Pritchard, the provision would serve to protect Twitter from a possible acquisition: "The management in charge thinks they are doing a great job, and would rather not be fired. They have secured some protection, at the cost of granting [Musk, ed] a seat on the board, "explains Pritchard.
Attention-seeking There is also another theory that deserves consideration: that Musk is doing all of this for fun. "I think people attribute plans to him that are too elaborate," explains Dash, who believes Musk's decision could have long-term ramifications. “At the highest levels, being a member of the board of directors is a job that involves dealing with corporate governance. And Musk is blatantly unable to do so, as evidenced by the boards of his companies, which are extremely dysfunctional and irresponsible. "Continues Dash. The troubles of Tesla's board of directors have been reported in detail since 2018, and Musk was recently sued. sued by a Tesla shareholder on suspicion of keeping an excessive share of the company's profits for himself.
Musk's purchase of Twitter stock could simply be an extremely expensive way to keep your name in the spotlight, says Cary Cooper, professor of business administration at Manchester Business School. "He loves the media - explains Cooper -. He is an entrepreneur, he is outside the box, he is a character. And Twitter is a communication vehicle. "
However, there are those who believe the deal is a sensible move for Twitter and that it could ultimately prove beneficial to the platform." Having a Twitter super user on the board of administration is exciting - says Zehavi -. Musk is a Twitter master. He knows how to make it work in a way that not even Jack [Dorsey, ed.] Has been able to. "Zehavi believes that the transition from a passive investor to a member of the Twitter board represents an opportunity for Musk to show the little respect he has. for the Sec. "Elon never misses an opportunity to scoff at the Sec", explains Zehavi, and this - he continues - raises more general fears about Musk's actions: "The fact that someone can exploit so much power without any real consequence is bizarre ".
What happens to Twitter largely hinges on the whims of a man who has long had a reputation for being particularly eccentric. What is certain is that the process that led to Musk joining the board Twitter's administration failed to take into account the rules of the Sec. "Most people strive to get along and avoid problems," Pritchard explains. For Musk, he adds, things are going well otherwise: "I would say it is the opposite. His attitude towards the Sec can only be described as dismissive. "
This article originally appeared on sportsgaming.win UK.
