At the social media company Twitter (TWTR) – Get Twitter, Inc. Report the next board meeting in just over two weeks in San Francisco.
As a newly appointed board member, Tesla (TSLA) – Get Tesla Inc Report Chief Executive Elon Musk and Twitter co-founder and former Chief Executive Jack Dorsey are fighting over competing visions of what Twitter could be like in the future.
Musk announced 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-based company announced it would appoint the billionaire CEO to its board of directors as a second-class director with a term that expires at Twitter’s 2024 annual meeting.
Musk filed a more detailed financial disclosure on April 5 to identify himself as an active investor, meaning he plans to play a key role in shaping the platform. This was a total reversal of his original stance, which was that he would have been a passive investor.
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How can Musk help Twitter?
Musk joins Twitter at a time of declining user growth and a total of 217 million daily active users, well behind tech rivals like Meta (FB) – 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 have also failed to resonate with audiences. Fleets’ Disappearing Stories feature and live-streaming feature Periscope were discontinued last year after user engagement dropped.
Experts are divided as to whether the world’s richest man, who has a net worth of $276 billion, according to the Bloomberg Billionaires Index, is investing in Twitter to potentially increase his influence on the social media platform, or if it’s just a sharp one Return trades investment.
Musk’s recent tweets show he’s willing to make changes, possibly starting with an edit button, a longstanding request from Twitter users dating back to 2016. The poll has received over four million votes as of the publication of this story. And a majority of users at 73.6% voted for the edit button, Twitter’s most requested feature.
Twitter official Confirmed It’s been working on an edit button just 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 ensure that Twitter is no longer overly censored, gets an edit button and the platform changes its algorithm to make it accessible, i.e. open source, which gives users much more power.
But chatter of a full-blown hostile takeover is losing some of its traction as Musk can’t own more than a 14.9% stake in the company for the next two years, according to Twitter’s most recent filing with the Securities and Exchange Commission.
“Musk’s addition to the Twitter board is an important signal that Twitter welcomes Musk and not a more hostile situation,” Ives tweeted, whose comment has been widely followed since the news broke.
Another Wall Street expert said Musk believes he can make Twitter a better product at a time when users are increasingly frustrated with the social media platform’s inability to embrace change react.
“Their user growth has slowed sharply in the face of product changes designed to improve it. Old users aren’t using the product enough,” Oppenheimer CEO Jason Helfstein said in a phone interview with TheStreet.
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“He [Musk] made this personal investment because he believes Twitter is an undervalued asset and his involvement would enhance the product and increase the stock,” Helfstein said.
Musk has a strong following among ordinary retail investors, and if the past few days are any indication, Wall Street has swallowed Twitter stock. The share price is up almost 30% since the close on Friday last week.
Will they all fight for freedom of speech?
Musk, who claims to be a free speech absolutist, “thinks that Twitter applies too much censorship and restricts content that it deems acceptable,” Helfstein pointed out.
But Dorsey, Musk and CEO Agrawal may disagree on how much free speech should be allowed on the platform, said TheStreet Smarts senior editor Todd Campbell.
“For example, should language be moderated to protect it from misinformation or hate? And if so, how strict?” he said.
“In the past, Musk seems to have suggested a ‘jack of all trades’ approach reminiscent of the town square, while Agrawal seems to have favored some kind of curated free speech. At times, it felt like Dorsey reluctantly accepted policies restricting speech on the platform. So, it will be interesting to see whether freedom of speech is a focus for the board or whether these differences are exaggerated.”
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Team Musk and Dorsey’s new Twitter
While Musk now officially owns a larger stake in Twitter than Dorsey (Dorsey’s stake is 2.25%), as businesspeople the two billionaires share more similarities than meets the eye.
Dorsey and Musk are also both cryptocurrency evangelists, so they may find common ground to work together, experts suggest.
“Both are optimistic about blockchain and decentralization and could probably agree to move to a decentralized content model on the platform,” Helfstien said.
Musk, who is also CEO of SpaceX, joins the Twitter board as both “an ardent believer and an intense critic.” And it’s clear that Dorsey likes that. He regards Musk as a model user of the platform he founded and voiced by Musk 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 restructuring of the company’s board.
“If Musk has a strong opinion (and I think he does) on how best to position Twitter for future growth, what happens when Twitter’s board of directors goes against his vision?” Campell said.
“There’s a good chance Musk’s ideas for improving the platform could shake the status quo. Will board members be fine if they deviate from the current path in directions that may not pay off for years? And if they oppose Musk’s vision, will Musk deal with it diplomatically? I could see the composition of the board changing significantly from here,” Campbell said.
Twitter’s current board of directors consists of 11 members, including CEO Agarwal, Dorsey, independent board chairman Bret Taylor, also co-CEO of Salesforce (CRM) – Get salesforce.com, inc. Report, among others Egon Druban, CEO of Sliver Lake, the former Twitter chairman Omid Kordestani.
It remains to be seen which direction Musk will take the social media platform, but it could — in many ways — be just what Twitter needs right now.