With Elon Musk buying up a 9.2 percent stake in Twitter and joining the social platform’s board of directors, a $2.9 billion question remains: What, exactly, is the Tesla CEO and outspoken billionaire trying to do?
As one of the richest people in the world, Musk isn’t parking some of his cash in Twitter to make money, even though shares of Twitter rose more than 20 percent after Musk’s investment was disclosed April 4 in an SEC filing. But the SpaceX founder, now the largest outside shareholder in the company, has spoken out about Twitter’s policies regarding “free speech” and has tweeted about making “significant improvements” to the platform, teasing the possibility of advocating for an edit button on tweets.
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Musk thus far appears to have the support of other board members, including outgoing member Jack Dorsey and CEO Parag Agrawal, and it’s unavoidable that Musk will have the ear of executives now that he has a board seat — which, to some analysts, could be beneficial to Twitter. “Elon Musk is a brilliant man, no doubt,” Craig Huber of Huber Research Partners says. “Elon on the board and/or large investor in any company can only be additive, in our opinion.”
And some outsider observers believe that Twitter’s approach to content moderation — which includes labeling misinformation and removing tweets or accounts that repeatedly violate policies — won’t make a complete 180-degree turn to meet Musk’s desires.
“I’m seeing a lot of panic about Elon Musk and what that might mean for content moderation policies. But that is the role of management, not the board, no matter how full of bluster Musk is and even with a nearly 10% holding,” Vivian Schiller, formerly the head of news at Twitter and now the executive director at The Aspen Institute, says in an email. “Plus, the Twitter staff has proven to not be shy. Ditto the heaviest Twitter users. A radical change in policy could completely upend the company.”
PP Foresight analyst Paolo Pescatore also says that Musks’ appointment on the board will be met with “mixed feelings,” given that his interest in Twitter “feels like the next step of his master plan to shape the future strategic direction of the company.” “While all key stakeholders will welcome the share price increase, his long-term intentions are unclear,” Pescatore adds.
Musk’s intentions were debated on April 4 after he disclosed his stake in Twitter via a so-called Schedule 13G filing for the “acquisition of beneficial ownership by individuals” rather than a filing on form Schedule 13D — the latter of which is a more common route for those who intend to be “activist” investors. Instead, the 13G filing is for investors who “have not acquired the security with the intent of influencing control over the issuer and are not directly or indirectly the beneficial owner of 20 percent or more.”
Still, some analysts argue that advertisers working with Twitter likely prefer social media content standards, even if they result in fewer users or less usage. That could mean that a “free speech absolutist” approach, as Musk has called it, may not be to everyone’s liking on Madison Avenue.
In a note titled “Musings on Musk and Monetization as Elon Puts His Money Where His Mouth Is,” Wells Fargo’s Brian Fitzgerald said Twitter would likely still prioritize “platform health” under Agrawal. But should Musk successfully exert an outsized influence from his board seat and due to friendships with board members, Fitzgerald notes that “a more free-wheeling character to conversation on Twitter could drive incremental engagement among some segments of the Twitter user population, but could also serve to alienate other users, including by subjecting users to abusive behavior on the platform.”
Musk could also face consequences for missing a regulatory filing deadline with the SEC to disclose his stake in Twitter. And given his reputation for getting into hot water with the SEC — the Tesla CEO settled with the governing body in 2018 after being charged with defrauding investors over his tweets about taking Tesla private — Twitter could be in for its own headache.
“While Mr. Musk’s involvement in the story is certainly noteworthy, unless he plans to materially increase his stake (ideally acquiring incremental shares at a strong premium), his potential influence on the company is likely not particularly helpful to Twitter’s business,” Wells Fargo’s Fitzgerald said.
