Twitter’s new boss and one of the social network’s liviliest denizens will be paying even more attention to each other.
Elon Musk, the billionaire Tesla and SpaceX founder, has accumulated a 9.2% stake in Twitter, making him the company’s largest shareholder, according to a new SEC filing. He is already one of the most followed people on the app with over 80 million followers—rivaling Donald Trump’s reach before Twitter expelled the former president—and has been critical of the company, potentially setting up a collision between him and Parag Agrawal, who succeded Jack Dorsey as chief executive in November.
Musk posted a poll to his Twitter account a week ago. The poll received nearly 2 million votes and asked whether Musk was unfairly restricting speech. This has been a conservative issue for years.
For now, Twitter’s investors are enjoying Musk’s arrival. Pre-market trading on Monday saw the stock rise by 25% to $49.10 per share.
Agrawal was appointed to the Twitter top position and promised to continue Dorsey’s ambitious user growth goals. It hopes to have 315 million more active users by next year and generate $7.5 billion, which is significantly higher than the current numbers. Agrawal told Wall Street that he plans to encourage Twitter to take faster decisions and launch more products. This is a similar initiative Dorsey sought to promote.
A high-profile investor made some of Dorsey’s activities before he left. Elliot Management was one of the most well-known activist investors firms. They bought Twitter’s stake and then made several demands to the company in March 2020. One of them was Dorsey’s resignation. Elliot didn’t like that Dorsey was held to two different jobs. One ran Twitter while the other ran Block, the payments firm formerly called Square.
Twitter quickly reached an agreement with Elliot. This avoided the long-running corporate disputes that can often be a hallmark of activist campaigns. The company agreed to set new, larger targets—and to establish a succession plan for Dorsey. The pandemic did not affect the business, so Dorsey managed to stay in his position and let Agrawal take his place.
It remains to be seen if Agrawal and Twitter’s board will take the same approach with Musk, and Twitter couldn’t immediately be reached for comment. Before becoming CEO, Agrawal had been the company’s chief technology officer; he first joined Twitter as an engineer in 2011.
When Twitter announced Agrawal was getting the CEO role, Musk posted a meme to his account, which did not paint Twitter’s new chief executive in a positive light: The doctored image shows Agrawal as Russian dictator Joseph Stalin and Dorsey as another Soviet leader. Musk appeared to be expressing his conviction that Twitter limits speech by comparing Agrawal to Dorsey.
Musk is a well-known user of the service and has a good reputation, however his experience on Twitter has been marred by controversy. Musk and Tesla were forced to compromise on some Twitter limits in 2018, after Musk tweeted about his plans to privatize Tesla. Although he now seeks to lift those limits, Musk’s persona remains strikingly the same. Musk asked his Twitter followers in November if they wanted him to sell 10% off his Tesla shares. The tweet raised questions about whether Musk is following his agreement with the SEC—and whether the poll was really a PR stunt, with Musk having previously decided to sell the stock regardless of its result.
Twitter continues to be a target. Twitter’s culture has been viewed as less important than its financial success. As a result, it has not seen the same growth in revenue or share price that Snap and Facebook. Unlike those two companies, Twitter’s corporate structure makes it vulernable to outside pressure: Both Facebook and Snap have dual share classes with voting power—and ultimate control—resting in the hands of their respective founder CEOs, Mark Zuckerberg and Evan Spiegel. Twitter doesn’t have that type of protection. The protection it has is limited to its common shares. This means that Agrawal cannot help but find out the exact wishes of Musk.
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