As CEO and Founder Tesla Alon Musk decides to deal with a new issue – he is causing a strong media buzz around him. After reviewing Twitter , Yesterday (Monday) Musk reported on his new holding on the social network and became the largest shareholder in the company. Today the company announced that Musk has been appointed to the company’s board of directors.
What exactly happened and what do analysts around the world estimate? Globes makes an order.
What exactly did Alon Musk do and how did he act?
According to a regulatory document submitted to the US Securities and Exchange Commission (SEC), Alon Musk acquired 9.2% of the shares of the social network Twitter (73.48 million shares) as of March 14, making him the largest shareholder in the company – even more than the former CEO C K. Dorsey.
According to the closing price of the stock on Friday, this is an investment of about $ 2.9 billion. Following the publication of the news, Twitter shares soared more than 27% on Wall Street, which mainly shows the interest of investors during this.
It should be explained – Musk’s path to buying the shares was the short route, but with important implications. As part of the acquisition, Musk filed Form 13G, a shorter form filed with the U.S. Securities and Exchange Commission, which allows for a “passive” shareholder – meaning those who are not interested in influencing the company or changing control of the company. Investors who want to get seats on the board or change substantive things, usually submit a longer and more in-depth form, called 13D. The longer form includes a reference from the shareholders to disclose their plans and how they are financing the purchase of the stock.
One has to wonder how Musk reported the acquisition of the shares using Form 13G, which is intended for passive shares and not to gain control or power in changing things within the company – and yet has been appointed as a board member. In fact, Musk did not report its intention to gain control, but rather reported a 9.2% holding in the company, which does not constitute control. It is not known whether Musk appealed to the board to join or vice versa, but it could be argued that the move was made after the filing and the actual result that he joins but does not make him a controlling shareholder.
Has Musk broken the law?
In fact, under SEC law, anyone who buys more than 5% of a company’s ordinary shares must disclose his holdings within 10 calendar days. Musk reportedly reported using the short 13G form, but did so 21 days after March 14, the date he reported. During this period since March 14, Musk posted Twitter-related surveys on Twitter, and at the level of principle should have revealed the fact that he purchased the shares.
On the face of it, the SEC penalties for non-disclosure are low, usually about $ 100,000. For a man like Musk whose net worth according to Forbes stands at about $ 300 billion, that’s not really a significant threat.
Howard Brankenblit, a partner at the Sullivan & Worcester LLP law firm estimated the Wall Street Journal that Musk would not face a penalty for late filing, in part because he did not plan to make changes to the company’s management or board, which would have raised the importance of the process.
However, it is important to mention that Musk and the SEC have a less positive relationship. In September 2018, the U.S. Securities and Exchange Commission accused Musk of making false and misleading statements to investors when it announced on Twitter that it was considering making it private at $ 420 a share and promised financing. The deal of course did not materialize, which led to Musk and Tesla agreeing to a settlement in 2019 that included: $ 40 million (20 million from Musk and Tesla each) and Musk was forced to temporarily relinquish his position as chairman of the company’s board of directors.
In 2020, the authority attacked Musk for violating some of the terms of the agreement that it must approve in advance tweets if they contain material business information about Tesla and could affect the share price. At the time, he tweeted that Tesla’s share price was too high, which brought shares down. The SEC also summoned Musk after it published a survey on whether it should sell 10% of its holdings in Tesla.
What’s Musk’s new role on Twitter?
According to a document filed with the SEC, Twitter will appoint Musk as a director on the company’s board of directors until 2024. % Of the company’s ordinary shares. ”
The current CEO of Twitter, Farag Agrwal, tweeted about Musk joining the board: “It has become clear to us that he will bring great value to our board. He is both an avid believer and an intense critic of the service, which is exactly what we need on Twitter and in the conference room, to strengthen us in the long run. ”
Musk tweeted back to Agrwal and teased: “Looking forward to working with Farag and the Twitter board to make significant improvements to Twitter in the coming months!”.
Looking forward to working with Parag & Twitter board to make significant improvements to Twitter in coming months!
– Elon Musk (@elonmusk) April 5, 2022
What’s his plan?
Some estimates suggest that Musk’s plans rely on passive investment to enjoy a rise in the stock. Other assessments see this move in Musk as a way to influence the social network itself.
Analysts around the world estimate that Musk is not one to remain passive in the company. Professor Jill Fish of the University of Pennsylvania told Bloomberg that “the idea that Musk Musk will fall into a passive category is probably a hoax. He’s not the most passive guy. The question should be asked: Will Alon Musk really be happy with a gamble of this size and stay passive?”. On this side of the barricade there are those who argue that Musk comes to change and do, and it’s only a matter of time until we hear it.
What is his position on removing content from social networks?
We have seen in the past cases where Alon Musk has complained about cases where companies have decided to remove content from their platforms. For example, Musk attacked Amazon for deciding to restrict the sale of a self-published e-book that questioned whether the corona virus was deadly as public health experts said. Amazon returned the book and said it was accidentally blocked.
In the past, Musk actually surveyed on March 24, again after having already purchased the shares in question, and asked followers whether Twitter’s algorithm should be open source – meaning accessible to the public. Jack Dorsey, the outgoing CEO of Twitter, re-tweeted the survey and replied: “The choice of which algorithm to use (or not) should be open to everyone.”
The choice of which algorithm to use (or not) should be open to everyone https://t.co/o2DkSTWW0O
– jack⚡️ (@jack) March 25, 2022
How strong is the connection between Musk and Twitter?
In many ways, it is easy to say that Musk sees this social network as close to his heart: he is among the prominent tweets on the network, he has a clear audience that includes more than 80 million followers. Musk has been having fun with his followers in recent months – for example, he shared with them his dilemmas about whether it is worth selling holdings in Tesla and more. Many of his tweets also lead to an impact on the investment world like tweets on cryptocurrencies and more.
About a week and a half ago, that is, 11 days after he became the largest shareholder in the company, Musk tweeted a poll and asked: “Freedom of expression is essential for a functioning democracy. Do you believe that Twitter adheres to this principle?”. In response to the poll he tweeted: “The implications of this poll will be important, please vote carefully”. More than 70% of the two million votes cast negative.
Free speech is essential to a functioning democracy.
Do you believe Twitter rigorously adheres to this principle?
– Elon Musk (@elonmusk) March 25, 2022
A day later he tweeted: “Given that Twitter de facto serves as a public city square, non-compliance with the principles of freedom of expression fundamentally undermines democracy.” At the level of principle, he raised the possibility that there might be room for a new social network he might establish.
Given that Twitter serves as the de facto public town square, failing to adhere to free speech principles fundamentally undermines democracy.
What should be done? https://t.co/aPS9ycji37
– Elon Musk (@elonmusk) March 26, 2022
How did Musk react to everything that was happening?
Musk’s first tweet on the subject clarifies some of his ambiguous intentions: “Oh hi lol”
Oh hi lol
– Elon Musk (@elonmusk) April 4, 2022
What’s the first change Musk plans to make on Twitter?
Alongside this, Musk addressed in another tweet on Twitter one of the painful points for Twitter users – the inability to edit tweets. He put up a poll and asked the followers if they were interested in such a possibility, but there is a linguistic error in the poll – “yse” instead of “yes”, which makes users fear that it is a prank or a hoax. Many commenters have seriously suggested that this should be considered for a set time after the tweet is published and also allow the editorial history to be seen backwards.
Do you want an edit button?
– Elon Musk (@elonmusk) April 5, 2022