Sparks are bound to fly at social media company Twitter’s (TWTR) – Get Twitter, Inc. Report next board meeting in a little over two weeks in San Francisco.
New battle lines may be drawn in top management as newly appointed board member Tesla (TSLA) – Get Tesla Inc Report Chief Executive Elon Musk and Twitter co-founder and former Chief Executive Jack Dorsey fight for competing visions of what Twitter might look like in the future.
Musk disclosed on April 4 that he bought nearly 73.5 million shares of the social media company for a 9.2% stake. A day later, the San Francisco company said it will appoint the billionaire CEO to its board as a class two director with a term expiring at Twitter’s 2024 annual meeting.
Musk filed a more detailed financial disclosure on April 5 to clarify himself as an active investor, which means he plans to take on a key role in shaping the platform. This was a total turnaround on his original stance, in which he would have been a passive investor.
How Can Musk Help Twitter?
Musk joins Twitter at a time of declining user growth and a total of 217 million daily active users, far behind tech rivals like Meta (FB) – Get Meta Platforms Inc. Class A Report (1.93 billion daily active people), Snapchat (SNAP) – Get Snap, Inc. Class A Report (319 million daily active users), and TikTok (1 billion users as of September 2021) among others.
Twitter’s recent innovations haven’t clicked with its audience, either. It discontinued its disappearing stories feature Fleets and live streaming feature Periscope last year after declining user engagement.
Experts remain divided if the richest man in the world, with a net worth of $276 billion, according to the Bloomberg Billionaires Index, is investing in Twitter to potentially boost his influence over the social media platform or merely as a sharp on the nose return on investment.
Musk’s recent tweets show that he is all set to make changes, potentially starting with an edit button, a longstanding demand from Twitter users that goes back to 2016. The poll has received over four million votes at the time this story was published. And a majority of the users at 73.6% voted in favor of the edit button, Twitter’s most requested feature.
Twitter officially confirmed it is working on an edit button only a day after Musk polled his 80.7 million followers about it, saying it’s been in the works since last year.
With his new title, Musk could make it so that Twitter may no longer have too much censorship, gets an edit button and the platform changes its algorithm to make it accessible, ie open-source, giving users a lot more power.
But ramblings of a full blown hostile takeover are somewhat losing traction since Musk cannot hold more than a 14.9% stake in the company over the next two years, according to Twitter’s latest filing with the Securities and Exchange Commission.
“Musk joining the Twitter board is a key signal that Twitter is embracing Musk rather than a more hostile situation,” tweeted Ives, whose commentary has been widely followed since the news first broke.
Another Wall Street expert said that Musk thinks he can make Twitter a better product at a time when users have grown frustrated with the social media platform’s inability to respond to change.
“Their user growth has slowed a lot in the face of product changes that were supposed to enhance it. Old users are not using the product enough,” Oppenheimer Managing Director Jason Helfstein in a phone interview with TheStreet.
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“Hey [Musk] has made this personal investment because he thinks Twitter is an undervalued asset and him being involved would make the product better and make the stock go up,” said Helfstein.
Musk does have a strong following among ordinary retail investors, and if the these last few days are any indication then Wall Street has lapped up the Twitter stock. Its share price has risen almost 30% since Friday’s close last week.
Will They All Fight Over Free Speech?
Musk, who claims to be a free speech absolutist, “thinks Twitter uses too much censorship and limits content that he deems acceptable,” Helfstein pointed out.
But how much free speech should be allowed on the platform could be where Dorsey, Musk, and CEO Agrawal disagree, said TheStreet Smarts Senior Editor Todd Campbell.
“For instance, should speech be moderated to protect against misinformation or hate? And if so, how strictly?” he said.
“In the past, Musk’s seemingly suggested an ‘all-comers’ approach reminiscent of the town square, while Agrawal has seemingly favored a type of curated free speech. At times, it’s felt like Dorsey begrudgingly embraced policies limiting speech on the platform. So , it will be interesting to see if free speech is a flashpoint for the Board or if these differences are overblown.”
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Team Musk and Dorsey’s New Twitter
While Musk now officially owns a bigger share of Twitter than Dorsey (Dorsey’s stake is 2.25%), the two billionaires have more similarities as businessmen than one might think.
Dorsey and Musk are also both cryptocurrency evangelists, so they could find common ground to work together, experts suggest.
“Both of them are bullish on blockchain and decentralization, and could probably agree to switch to a way to move to a decentralized content model on the platform,” said Helfstien.
Musk, who is also CEO of SpaceX, joins Twitter’s board both as “a passionate believer and intense critic.” And it’s clear Dorsey likes that. He’s considered Musk a model user of the platform he founded and Musk expressed his support for Dorsey when activist-investor hedge fund Elliott Management tried to oust Dorsey as CEO in March 2020.
TheStreet’s Campbell said his entry could lead to a shakeup of the company’s board.
“If Musk has strong opinions (and I think he does) on how to position Twitter best for future growth, then what happens if Twitter’s board pushes back against his vision?” Campbell said.
“There’s a good chance that Musk’s ideas for improving the platform could shake up the status quo. Will business-as-usual board members be OK veering off the current path in directions that may not pay off for years? And if they dig in against Musk’s vision, will Musk be diplomatic about it? I could see the composition of the board change significantly from here,” said Campbell.
Twitter’s current board comprises of 11 members including CEO Agarwal, Dorsey, Independent Board Chair Bret Taylor, also co-CEO of Salesforce (CRM) – Get salesforce.com, inc. PostponementSliver Lake CEO Egon Druban, Former Twitter Chairman Omid Kordestani among others.
It remains to be seen which direction is Musk likely to steer the social media platform towards, but it could—in many ways—be exactly what Twitter needs right now.
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