Twitter will put Elon Musk on its board, a transfer that comes not more than a day after Musk revealed a brand new billion-dollar place within the firm making him its largest shareholder. The choice seemingly hopes to forestall a prolonged public battle over Twitter’s future.
“I’m excited to share that we’re appointing @elonmusk to our board!” Twitter CEO Parag Agrawal wrote on Twitter. “By conversations with Elon in latest weeks, it turned clear to us that he would deliver nice worth to our Board.” Musk, the billionaire CEO of Tesla and SpaceX, responded together with his personal constructive sentiment. “Wanting ahead to working with Parag & Twitter board to make vital enhancements to Twitter in coming months!” he mentioned in a tweet-reply to Agrawal.
Musk’s time period as a director will final till 2024, and beneath the brand new settlement with Twitter, Musk is prohibited from buying greater than 14.9% of the corporate, a clause meant to restrict how a lot energy he can wield over Twitter.
Musk on Monday disclosed a stake in Twitter value roughly $3 billion, some 9.2% of the corporate’s shares. The massive funding immediately turned Musk, a well-liked presence on the social media website, right into a presence the company couldn’t ignore until it needed to danger Musk making a push to overturn its management. Agrawal turned CEO in November, taking on the job from the departing Jack Dorsey.
“This was a pleasant transfer by the Twitter board to embrace Musk with open arms,” says Wedbush analyst Dan Ives. “We consider Musk becoming a member of Twitter will result in a bunch of strategic initiatives which might embody a variety of near-term and long-term prospects out of the gates for the corporate. Now it’s time to get out the popcorn and watch the developments over the approaching months with Musk on the board.”
Musk has mentioned he desires Twitter to observe higher free-speech insurance policies and scale back moderation makes an attempt, concepts working counter to what Twitter and others like Meta have performed during the last a number of years. He has additionally described a want for Twitter to change into extra decentralized, opening up its algorithm and permitting customers to customise how content material shows of their feeds, proposals that do fall extra in keeping with related concepts from Agrawal and Dorsey.
Dorsey additionally voiced assist for Musk’s new function on Twitter’s board on Tuesday. “Parag and Elon each lead with their hearts,” Dorsey tweeted, “and they are going to be an unimaginable crew.”
By embracing Musk and giving him a board seat, Twitter hopes to keep away from what has occurred to different firms when effectively funded and aggressive traders take up funding stakes: protracted campaigns by these shareholders that sow confusion and doubt concerning the firm’s future.
Twitter fended off certainly one of these kinds of traders in 2020, and it used the same playbook to the one it has deployed now with Musk. In March 2020, Elliott Administration took a stake in Twitter, and the activist-investor agency swiftly unveiled a listing of placing calls for, together with one advocating for Dorsey’s departure. Twitter reached a take care of Elliott in lower than a month, giving it a board seat.
Dorsey bought to maintain his job—lengthy sufficient to handpick his successor, Agrawal. He additionally heeded different Elliott issues: sooner, extra bold progress targets and product growth. Twitter has mentioned it hopes to have $7.5 billion in annual income and 315 million customers by subsequent 12 months, markers that stay signficant leaps past its present ranges. Wedbush analyst Ives notes Twitter is “nonetheless struggling in a social media arms race,” a contest together with Fb mother or father firm Meta and Snap.
Traders have appreciated what they’ve seen to this point. Twitter inventory rose almost 30% on Monday and climbed one other 6.5% in pre-market buying and selling on Tuesday. The skyrocketing shares have pushed Musk’s fortune previous $300 billion—additional padding his place because the world’s richest individual—and added tens of hundreds of thousands to the online worths of Dorsey and one other departed Twitter cofounder Ev Williams.
As quickly as Monday night, it was clear Musk had gotten Twitter’s consideration. Musk launched a ballot on his Twitter account, asking his followers whether or not they needed an edit button added to Twitter, a function many have beforehand needed. Resoundingly, they answered within the affirmative. Agrawal then retweeted Musk’s ballot, one of many solely occasions he’s posted to Twitter since changing into CEO in November.
“The results of this ballot shall be essential,” Agrawal wrote within the retweet. “Please vote fastidiously.”