Shares of Twitter (NYSE:TWTR) are down 1.6% in pre-open Monday after Elon Musk, the company's largest shareholder, informed the management he won’t be joining the board.
CEO Parag Agrawal announced Elon Musk has rejected the company’s offer to join the board of directors, an unexpected turn of events just a week after Tesla's (NASDAQ:TSLA) CEO became Twitter’s largest shareholder.
Agrawal posted a tweet saying the social media company’s board held multiple talks with Musk, who did not state the reason why he will not be joining Twitter’s board.
Twitter planned to appoint Musk to the board on Saturday, a move that would have prevented him from becoming the beneficial owner of nearly 15% of Twitter’s common stock.
"I believe this is for the best," Agrawal said, referring to Musk’s decision. "There will be distractions ahead, but our goals and priorities remain unchanged."
Musk’s only response was a tweet with the face-with-hand-over-mouth emoticon. The billionaire disclosed his 9.1% stake in Twitter on April 4, after which he promised to bring “significant improvements” to the social network.
The announcement of Musk joining Twitter’s board prompted discontent among some Twitter employees, who were concerned that he could harm the company.
Wedbush analyst Daniel Ives sees more turbulence coming after CEO Agrawal announced the news on Sunday. Ives believes two sides couldn't agree on Musk's communications with the public “as he likely needed to take a more back seat/quiet stance as part of joining the Board.”
“This now goes from a Cinderella story with Musk joining the Twitter Board and keeping his stake under 14.9% helping move Twitter strategically forward to likely a "Game of Thrones" battle between Musk and Twitter with the high likelihood that Elon takes a more hostile stance towards Twitter and further builds his active stake in the company,” Ives commented in a note.
The analyst sees the three potential scenarios for Musk and Twitter.
- Musk teaming up with a private equity partner to force major changes at Twitter;
- Musk creating more noise with proposals for platform changes;
- Musk exiting the Twitter investment.
“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,” Ives concluded.
By Senad Karaahmetovic