As confirmed by Parag Agrawal, the CEO of Twitter Inc, who announced on Sunday night that Elon Musk, Tesla’s CEO, has decided not to join the social media company’s board. The market has different reactions to Elon Musk’s decision.
Last week on Tuesday, Musk spent $2.8 billion buying a 9.2% stake in social media company Twitter when he purchased 73,486,938 of common stock in the social media company. This purchase made him Twitter’s largest individual shareholder. Shortly afterwards, Twitter announced that the Tesla executive would be taking a seat on the company’s board.
However, in a tweet on Sunday night, Agrawal disclosed: “Elon’s appointment to the board was to become officially effective on April 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.”
Neither Agrawal nor Musk disclosed the reason for the rejection.
Both Musk and Twitter’s management team had expressed excitement about the addition of the executive to the board.
Musk has been a free-speech absolutist and a critic of Twitter. When he bought a Twitter stake on April 5, he disclosed plans to bring about significant improvements at the major social media platform.
Some corporate governance experts have tried to explain the reason behind Musk’s decline to join the board, basically pointing to the fact that putting Musk on the Twitter board of directors could have been a way of controlling his influence over the company.
Danni Hewson, a financial analyst at the investment company AJ Bell, explained: “He (Musk) was never going to want to be constrained in the way that Twitter clearly would want to constrain him as a member of the board.”
In a client note, Angelo Zino, a Senior Equity Analyst at CFRA Research, stated: “We had thought the equity cap and board seat was originally intended to handcuff Musk in many respects and think he is unlikely the type of individual who will now just sell his stake and walk away.”
Brian Fitzgerald, Wells Fargo analyst, also elaborated: “I think what he realized is that by being on the board his voice will diminish and that’s absolutely the last thing he wants.”
As part of Musk’s agreement to join the board, he had committed not to acquire more than 14.9% of the company’s shares during his term. Twitter stated in a regulatory filing that it intended to appoint Musk to its board for a term that will end in 2024. But since the deal is no longer there, this leaves the door open for him to take a more aggressive stance by purchasing more of Twitters’ shares.
Musk’s Influence on Crypto Market
The CEO of electric-car maker Tesla has been a staunch backer of crypto coins and often uses Twitter to publicly announce his views on cryptocurrencies. Musk, who has over 55 million followers on social media, his tweets normally impact the crypto market significantly. His witty tweets on cryptocurrencies, especially Bitcoin and Dogecoin, influence the prices to soar or fall.
In May, his tweet brought the price of Bitcoin down when he announced Tesla will not accept Bitcoins anymore because of the environmental concerns around crypto mining. Bitcoin saw a dramatic fall from $65,000 to the $30,000 level.
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