Written by / Zhu Lin
Editor/ Qian Yaguang
Design / Shi Yuchao
Source: TheVerge, Protocol, by Russell Brandom
It's been a busy week for Elon Musk and Twitter.
On April 5, Elon Musk filed documents showing that he had spent $2.8 billion to acquire a 9 percent stake in Twitter, becoming the company's largest individual shareholder. Shortly thereafter, Twitter announced he would have a place on the company's board.
Twitter shares surged more than 20 percent after news of Musk's stakes, and everyone associated with the company began to think about how his involvement would change everything.
Four days later, the deal for the board seat failed. In an open letter to Twitter employees on the evening of April 10, Twitter CEO Parag Agrawal said Musk had quit the day before.
There is little explanation for the last-minute shift, but any effort musk to join the board has failed.
So, what's really going on here? We don't have an answer, but we list everything we know about the situation, trying to answer around five big questions.
Why Musk didn't join the board
It's weird. The statement from Agravar on the evening of the 10th deliberately vague, gave almost no specific details, and particularly implied that there was more to the story.
Twitter CEO Parag Agravar
Since Twitter is a public company, Agravar is under pressure to make some kind of statement before the market opens on the 11th. News of Musk's boarding has sent Twitter's stock soaring, so any delay in sharing news that he's not on the board could raise concerns about insider trading.
Twitter even filed an official document with the U.S. Securities and Exchange Commission (SEC) alongside the CEO's statement to ensure everyone could get the news, but Agravar didn't reveal much more.
Musk's account is also vague. The best clue available is a parallel SEC document in which he sets out his new obligations as a majority shareholder, making it clear that he "can express his views to the board through social media or other channels."
In short, he was allowed to continue complaining about Twitter on Twitter, which could conflict with his fiduciary responsibilities as a board member. Protocol reporter Issie Lapowsky flagged a recent tweet by Musk saying, "Elon became the largest shareholder for free speech... Elon was told to behave well and not to talk casually. ”
Background checks are going on
Agravar said in a statement that Musk's initial appointment was "subject to background checks and formal acceptance." With no other explanation, some observers interpret this as suggesting that background checks uncovered some information that disqualified Musk from becoming a board member, which could also explain why everything happened so suddenly and without much explanation.
Musk became Twitter's largest individual shareholder
It's hard to imagine what the survey will find, but it must be something material. Musk is one of the most scrutinized public figures in the world, so if anything too crazy is, it shouldn't be hidden for long.
Another interpretation is that Agravar tried to resolve some of the potential embarrassment surrounding the 5-day announcement that made it seem like Musk would be on the board in a few days' time.
The emphasis on background checks will certainly give musk the impression that there's something ulterior trove about it, but it's a subtle political blunder you might think of, as Agravar is a technology-oriented CEO who has only been in office for 6 months.
Twitter employees are worried about something
Twitter employees don't seem to be impressed by Musk joining the company's board, and now that he's not, many are relieved. One team leader even responded to Agravar's tweet, saying: "I've been silent since the announcement because I wanted to give Twitter leadership a chance to be worthy of their employees, and they did." Thank you. ”
This suggests another interpretation of the incident, which was that Agravar quietly canceled the deal once it was discovered that Musk would be a burden on the board.
Don't forget that Agrawal's note was originally sent to Twitter employees, and if you interpret it as an effort to appease unhappy employees, the cold tone makes even more sense.
This theory has more loopholes than the Musk-centric theory (it's unclear what Agravar did that could invalidate the deal in a week), but it's worth considering.
Former US President Trump was once banned by Twitter
Many on the U.S. right see Musk's board seat as a victory for conservatives as an opportunity to retaliate against the company for banning former President Donald Trump's account in 2020. If The average Twitter employee takes these comments seriously, it's not hard to see why they're nervous.
There is no direct evidence that Musk bought the company's stake to address dissatisfaction with some sort of culture war, but it only raises a bigger problem...
Musk wants something from Twitter
This is the core problem that has been at the heart of the coin since the news that Musk bought billions of dollars in stock. We still don't know why he bought so many Twitter shares or what he wanted from the company. If he just wants to have a say in how Twitter manages its platform, it makes sense to be a board member.
But there are also limits to being a board member: there are limits to how many shares Musk can own, and what he can say, stemming from a broad responsibility to act in the best interests of shareholders. If he wants to force the company to take a completely different approach to moderation, the restrictions on board members may outweigh its benefits.
If Musk just wants to take over Twitter completely, then the issue is very pressing. At any time, if a wealthy person buys a large stake in a company, there is always a risk of hostile acquisition. With Jack Dorsey's exit and the turn of activist investors, Twitter has become particularly vulnerable.
Former Twitter CEO Jack Dorsey
Musk is no stranger to this financial power game, from his controversial relationship with Tesla's founder to Tesla's acquisition of SolarCity in 2016. And from a strictly financial standpoint, he had enough money to buy the company six times. If he wanted to take over, he could probably do it.
Musk may not want to do this for important objective reasons. He is already ceo of two companies and has held leadership positions at three others. Twitter doesn't fit his brand image of ambitious engineering projects, and it's not a particularly safe bet financially.
Musk's public statements throughout the incident were so confusing that it was hard to say what his plans were, or if he had them. On the same day that board membership was lost, Musk tweeted that the company's headquarters should be transformed into a homeless shelter.
The next day, he said the company should "remove the W from Twitter." (The word Titter means "smirk.") Both tweets were later deleted. In public, he seems more interested in tweeting than running a company — but that's hard to determine.
What happens next
Musk didn't join Twitter's board, but he owns 9 percent of the company and will still have a huge say in its future. The fact that he's not on the board means he's likely to exercise that power in public, either through more financial action or with more intense criticism of the company's choices.
As Musk's ongoing war with the SEC shows, he's not embarrassed to make some public statements that would cause the company's stock price to fluctuate wildly. If he felt knocked out last week, he would have plenty of chances to pull back the score.
This article was originally produced by Automotive Business Review
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