Suppose you have a problem with Twitter, such as B. the status of a ‘Edit’ function or a much more important question like the platform’s role in free speech in cyberspace.
Elon Musk — with his newly announced 9.2% stake in the social media company — isn’t your “shake-up” investor, according to experts. At least not yet, they discover.
In a filing with the Securities and Exchange Commission Monday, Musk announced his purchase of 73.49 million Twitter shares. The news sent the company’s shares soaring, and people wondered what the ultimate plan was for the company to buy it the richest man in the world. According to FactSet data, Musk is now the large sole holder of common stock of Twitter.
After all, it’s a twist for the Tesla TSLA,
CEO and co-founder who has criticized the platform and once got into hot water with securities regulators over his 2018 tweet “Going Private.”
Musk has told the world about his purchase in a piece of SEC filing that implies a passive approach to a large investment in a publicly traded company.
He didn’t mention the stake — or associated shareholder votes — in a short, cheeky tweet after news of his purchase broke Monday.
Musk’s new 9.2% stake doesn’t give him direct control of Twitter, said Tyler Gellasch, executive director of the Healthy Markets Association, an investor trade group. “The question then becomes, even if he doesn’t explicitly have direct or formal control, will he try to gain it or exercise it in any way? Given his high profile engagement on Twitter, it seems like he will.”
Musk unveiled the stock purchase on what he called a Schedule 13G instead of a Schedule 13D — the document activist investors would traditionally use when taking at least 5% and planning to push for corporate changes.
Without getting into the bureaucratic complications, the Securities Act says an investor need not file the Schedule 13D if they do “acquired such securities in the ordinary course of business and not with the aim or effect of changing control or affecting” the company.
Still, Gellasch noted, “The lines between what is passive today and what is active tomorrow are becoming quite blurred. The SEC rules really have not kept pace with the changing nature of investor engagement.”
Just because Musk’s new investment is passive for now, doesn’t mean he can’t change his mind later with more paperwork and more purchases, said Professor Cindy Schipani, who specializes in corporate governance at the University of Michigan’s Ross School of Business.
And even if it’s not a formal offer of a change, Schipani said Musk now has his well-publicized Twitter account to communicate with senior management — and likely his phone, too. “A 9.2 percent investor could probably listen to someone at the company just to listen,” Schipani said.
“I wonder if it’s a message just to remind Twitter that he’s out there with his financial means. It can simply be a message,” said Schipani – “or it can just be an investment.”
“In the past, investors were mostly sober and unemotional (think Warren Buffett), but today investors seem to feel they are owed more than a return,” said Tom Siomades, chief investment officer at AE Wealth Management. “That’s what ESG investing is all about. Musk is an extension of that, he feels like Twitter is violating free speech and he probably wants to make a difference. He will use his money, his power and his prestige to push through changes in the company.”
The stock in Twitter TWTR,
which did not respond to a request for comment, closed at $49.97 on Monday, up more than 27%.
Year-to-date, Twitter shares are up more than 15% thanks to the recent appreciation in value. A new CEO, Parag Agrawal, has headed Twitter since November, when Jack Dorsey, the company’s co-founder and CEO, resigned. Dorsey, now a member of Twitter plank, accounts for 2.3% according to FactSet data. The Dow Jones Industrial Average DJIA,
and the S&P 500 SPX,
are down nearly 4% year-to-date.
“Although the stock is considered a ‘passive’ stake in the company, Elon Musk is never a passive participant in anything he does,” said Alexandra Cirone, a professor in the government department at Cornell University. “Musk can now bring his point to the company in a way he couldn’t before, but it’s not clear to what extent Twitter will listen.”
Even if he eventually tries to change the company’s policies or user experience, it’s not something that can be done quickly at an established social media company, she said.
“Although Musk describes himself as a ‘free-speech absolutist,’ it’s unclear how much he understands the complexities of both information ecosystems and content moderation on social media. Social media companies are private and for-profit, so users have no right to freedom of expression,” Cirone said.
Social media platforms can set standards to keep users happy and engaged, Cirone said – “But it’s worth noting that many of the ‘free speech’ platforms, with the possible exception of Telegram, are struggling to keep up with the mainstream platforms to compete.”
Two top executives at Truth Social, the social media site launched by Trump Media and Technology Group, former President Donald Trump’s company, have reportedly quit because the platform is over it, according to a report by Reuters struggles to gain a foothold.
https://www.marketwatch.com/story/can-elon-musk-change-the-way-people-tweet-now-that-hes-twitters-largest-single-shareholder-musk-is-never-a-passive-participant-in-anything-he-does-11649110844?rss=1&siteid=rss Can Elon Musk change the way people tweet now that he’s Twitter’s largest single shareholder? “Musk is never a passive participant in anything he does”