Maybe Twitter’s stock (TWTR) shouldn’t be getting drilled on surprise news Elon Musk won’t be joining the company’s board.
Shares of the social media platform dropped by as much as 4% in pre-market trading Monday as Twitter revealed Musk will not be joining the board.
“Elon has decided not to join our board,” Twitter CEO Parag Agrawal said in a new 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 now essentially turns Musk into an activist investor on Twitter.
You see, 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.
That would arguably be positive for Twitter.
Musk is also now able to flat out buy Twitter, if he so chooses to spend his billions in that manner. That, too, would be a positive from a market standpoint.
Make no mistake, Twitter in fact needs a shake-up — one that perhaps would be better driven by Musk being outside of the boardroom or as its private owner.
Said Jefferies tech analyst Brent Thill, “They [Twitter] need to shake things up. Twitter has really been caught in a rut, and they haven’t been innovating at the pace they could.”
Musk is that agitator, even if he has temporarily turned Twitter into a joke of a public company.