Twitter’s Social Network Chief Executive has announced on Tuesday, April 5, 2022, that Tesla boss, Elon Musk will be joining the company’s Board of Directors, a day after buying a major stake in the company, making him the largest shareholder.
In a tweet, Twitter CEO, Parag Agrawal, announced saying: “I’m excited to share that we’re appointing @elonmusk to our board! Through conversations with Elon in recent weeks, it became clear to us that he would bring great value to our Board,”
He called Musk “a passionate believer and intense critic of the service which is exactly what we need” at the company. Later, Musk replied saying he is looking forward to making changes at the social network giant.
The Deal Breakdown
Currently sitting as the world’s richest man Musk on Monday, April 4, 2022, disclosed the purchase of 73.5 million shares or 9.2% of Twitter’s common stock.
An Analyst, Dan Ives, from Wedbush, revealed that although Musk’s 9.2% stake in the social media company may sound small, he described it as “eye-popping”, equating it to 73.5 million shares in the social network.
Shares on the platform soared following Monday’s (April 4, 2022) revelation that the Tesla Founder has become the largest shareholder in the company. This is to mean that stake has already grown in value and is now worth more than $3bn. As it stands, Musk’s shareholding is four times greater than that of Twitter Founder, Jack Dorsey, who stepped down as Chief Executive in November last year (2021)
Analyst, Mr. Ives, added that he believes Elon Musk has his eyes “laser set” on Twitter, and his significant holding will see him push for an active role in the management of the company.
“We would expect this passive stake as just the start of broader conversations with the Twitter board/management that could ultimately lead to an active stake and a potential more aggressive ownership role of Twitter.”
Analyst, Dan Ives, from Wedbush
Away from his Stake in Twitter
Reports suggested that Musk has something of a love-hate relationship with Twitter. The billionaire is a frequent user of the platform, with more than 80 million followers, regularly mixing in stirring and controversial statements about current affairs or other public figures with remarks that range from unusual to business-focused.
The platform seems to suit his impulsive personality, when last year (2021), he famously asked if he should sell 10% of his stock in his electric car firm Tesla, to which Twitter users said ‘yes’. It led to Musk selling around $5bn (£3.7bn) of shares in the firm in November 2021.
Months earlier, he offered to sign a cheque for $6bn if the World Food Programme (WFP) could defend how it would be used to solve hunger around the globe, after an assertion was made by the Head of the UN programme.
Likely Looming Trouble Lurking
But away from the good, tweeting has also got him into trouble. A 2018 post about Tesla stock led to an investigation from the Securities and Exchange Commission (SEC) which ended with an agreement requiring the Firm’s lawyers to pre-approve certain tweets. It is unclear if that actually happened.
Interestingly, a report by the Wall Street Journal suggested that his Twitter share filings with the Securities and Exchange Commission (SEC), which under normal circumstances would have included a line saying he doesn’t intend to influence the company, came with a ‘Not Applicable’ mark.
The timing of the deal has also raised questions and could once again put Musk at loggerheads with financial regulators. His investment in Twitter was filed on March 14, 2022, but not announced until this week. US Securities Law requires disclosure within 10 days of acquiring 5% of a company.
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