There is now a “Game of Thrones” like battle between Elon Musk and Twitter, contends closely watched Wall Street analyst Dan Ives of Wedbush.
And that chess game could yield at least three outcomes, Ives thinks.
“Musk no longer joining the Twitter board could lead to a host of scenarios including 1) joining up with a private equity partner and forcing major strategic changes at Twitter and/or a sale, 2) creating more noise and angst for Twitter Board/execs with various proposed platform changes, or 3) does Musk say ‘game over’ reduce his stake and go home,” Ives explained in a new note to clients.
Shares of the social media platform slipped Monday as Twitter revealed Musk will not be joining the board, hence the inevitable posturing between the two parties.
“Elon has decided not to join our board,” Twitter CEO Parag Agrawal said in a fresh tweet. “I sent a brief note to the company, sharing with you all here.”
Continued Agrawal, “The Board and I had many discussions about Elon joining the board, and with Elon directly. We were excited to collaborate and clear about the risks. We also believed that having Elon as a fiduciary of the company where he, like all board members, has to act in the best interests of the company and all our shareholders, was the best path forward. The board offered him a seat. We announced on Tuesday that Elon would be appointed to the Board continent on a background check and formal acceptance. Elon’s appointment to the board was to become officially effective 4/9, but Elon shared that same morning that he will no longer be joining the board. I believe this is for the best.”
Agrawal went on to warn of “distractions ahead.”
The news (which comes after a weekend of wild Twitter-related tweets from Musk, including a since deleted poll to turn Twitter HQ into a homeless shelter) is an about face, but one that essentially turns Musk into an activist investor on Twitter.
When Musk took a 9.2% stake in Twitter a week ago he agreed not to increase his stake to more than 14.9%. In exchange, he was given a seat on Twitter’s board. That agreement is null and void as of today, opening the door for Musk to increase his stake in Twitter and put further heat on Agrawal.
Wedbush’s Ives doesn’t think Musk will dump his Twitter stake anytime soon, leading him down the activist investor route.
“In our opinion its likely paths 1 or 2 with the Street now focused on Musk’s next poker (next filing/stake in Twitter) move in this ongoing soap opera between Elon and Twitter,” added Ives.
Brian Sozzi is an editor-at-large and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.
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