But what has surprised the business community is that the billionaire chose a 13G form. That, according to the rules of the Securities and Exchange Commission (SEC), indicated that Musk would be a passive investor despite also being Twitter’s largest shareholder.
Being a passive investor also meant that Musk is committed to not influencing those controlling the company — and that the tech tycoon wouldn’t do anything to take over Twitter.
This was all the more surprising because Musk has already been a staunch critic of the first strategic moves announced by new CEO Parag Agrawal in an attempt to ease investor pressure.
Musk strongly criticized Twitter’s strategic shift toward non-fungible tokens (NFTs). The company announced in January that it plans to offer NFT holders special profile pictures.
Twitter displays NFT profile pictures in a special hexagonal shape as long as a user connects their crypto wallet to their social-media profile.
Musk has also frequently taken aim at Twitter’s policies on speech, and what it considers to be freedom of expression.
Musk, a Staunch Critic of Twitter
“This is annoying,” Musk commented on Jan. 21. “Twitter is spending engineering resources on this bs while crypto scammers are throwing a spambot block party in every thread!?”
Musk also floated the idea of starting his own social network because he was unhappy with Twitter’s principles of free speech.
“Is a new platform needed?” Musk asked his more than 80.5 millions followers on Twitter on March 26.
“Would you consider building a new social media platform, @elonmusk?” a Twitter user responded. “One that would consist an open-source algorithm, one where free speech and adhering to free speech is given top priority, one where propaganda is very minimal. I think that kind of a platform is needed.”
“Am giving serious thought to this,” Musk wrote back, without further details.
The exchange took place just a day after the richest man in the world polled followers about the rules of free speech on Twitter.
“Free speech is essential to a functioning democracy. Do you believe Twitter rigorously adheres to this principle?” Musk wrote.
Agreement Between Musk and Twitter
Now, Musk has just put an end to speculation on what he can and can’t do at Twitter.
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He has just sent new documents to the SEC in which he and Twitter indicate that he will be an investor and shareholder who will weigh in on Twitter’s strategy.
In a word, he will be an activist, an intention telegraphed by the new type of form filed, a 13D, on Tuesday evening.
In this new SEC filing, we learn much more about the moves the Tesla founder has already made on Twitter.
According to the updated paperwork, Musk began acquiring Twitter shares on January 31 and kept buying them until April 1.
In total, he made 43 transactions, with prices varying from $32.806 to $40.301.
Overall, Musk now holds 73,115,038 Twitter shares, which represents 9.1% of the company.
The largest transaction was carried out on Feb. 7 for 4,839,507 shares at a price of $36.515.
Musk crossed Twitter’s 5% threshold on March 14. This threshold generally triggers the obligation to disclose an investment
In all, Musk spent $2.64 billion. This investment has already created capital gains, because going by Twitter’s closing price on Tuesday, that stake is now worth $3.727 billion.
So What Can’t Musk Do?
While Musk can influence the future of Twitter, he will not be able to take control of the company, because he has disclosed that he signed an agreement that limits his stake in the platform.
According to the agreement, Musk cannot acquire more than 14.9% of Twitter until 2024.
In exchange, he obtained a seat on the board of directors.
“Musk joining the Twitter board (is) a key signal that Twitter is embracing Musk rather than a more hostile situation,” said Wedbush Securities analyst Dan Ives.
“We would expect Musk to have an immediate impact upon joining the board and the Street will look for a range of strategic paths ahead for Twitter with Musk on board,” Ives said.
Twitter executives thus far have shown only public support for Musk.
“Through conversations with Elon in recent weeks, it became clear to us that he would bring great value to our Board,” Parag Agrawal welcomed Musk on Tuesday. “He’s both a passionate believer and intense critic of the service which is exactly what we need on @Twitter, and in the boardroom, to make us stronger in the long-term. Welcome Elon!”
Musk didn’t wait long to start using his influence.
“Do you want an edit button?”, the tech tycoon posted on Monday.
But Twitter responded Tuesday by explaining that the platform had already been working on an edit button for several months.
“yes, we’ve been working on an edit feature since last year! no, we didn’t get the idea from a poll 😉,” the company said. “we’re kicking off testing within @TwitterBlue Labs in the coming months to learn what works, what doesn’t, and what’s possible.”