The stock market is a world of its own with constant monetary changes, algorithms for investing in the correct businesses and the risks of losing everything. On April 4, 2022, it was announced that Elon Musk had become the largest shareholder of Twitter. Then, a day later he joined the board of directors. Musk has acquired 9.2% of Twitter’s shares which is worth over $2.64 billion. This random investment leaves many curious as to his reasoning behind buying stock in a company that very rarely makes money.
Elon Musk is a name known for the creation of the electric car and his own company Tesla, where he got his start. He quickly changed the automotive industry and now continues to find ways to change other industries around the world, such as social media sites. However, his decision to buy stock in Twitter may have been a mistake due to the fact that Twitter continues to lose money due the lack of advertisement sales, one of their few sources of revenue.
Musk has discussed his intentions to create a new social media platform that truly allows people to express their opinions without the fear of being silenced. Instead of creating a new platform, he has decided to invest in Twitter as a more efficient way to alter it to his likings. Since he holds the largest share, he has been granted the ability to join the board of directors. It is claimed that all board members will have to follow the same set of rules, even if one is a multi-billionaire. Although, many are skeptical if Musk will follow these rules or if he will push every boundary to its limit.
Sophomore Nathan Musal is president of the PVHS chapter of Future Business Leaders of America (FBLA) and has been following Musk’s shares. “He will have a lot of power over what happens within Twitter. Companies are run in the best interests of shareholders and as the largest shareholder, they will probably take his opinions into the most consideration,” he explained. “Shareholders also have the right to vote on corporate policy, actions and board members, so even if Musk decides not to work with Twitter directly he still has power through the number of votes he has.”
Even with the offer to join the board, Musk denied the opportunity on April 10, 2022. Since he ultimately decided to decline the offer, he is no longer bound to the contract restricting the percentage of shares he can purchase, meaning he can buy more than 14.9% of the shares if he wishes. In other words, he is able to take over most of, if not all, of Twitter. Even without being on the board, Musk has substantial influence as the largest shareholder. Although there has yet to be a publicized reason as to why he is not on the board, it has become clear that he benefits most by continuing to be the largest shareholder.
It is well known that Musk has always been the first person to push the boundaries for his own benefit and has done so even before his investment into Twitter. In 2018, he tweeted, “Am considering taking Tesla private at $420. Funding secured.” This tweet never came true. His words increased the prices of his shares, allowing him and his company an increase in profit. As the truth came out that his company was in fact not turning private, the Securities and Exchange Commision (SEC) quickly got involved for false claims in the market. Two months later, he resolved his lawsuit in regards to settlement fraud for $20 million.
While Musk is not on the board of the directors, it has not stopped him from continuing his critical tweets. Musk’s Twitter account has quickly become a site of criticism on the future of Twitter and their plans going forward.
Even though he is one of the world’s richest, this does not excuse him from the rules Twitter has regarding false information. There have been many instances where Musk has violated SEC rules and used his platform as a way to manipulate his audience. While being on the board or Twitter’s largest holder does not protect him from the regulations of SEC, it does allow him the ability to state a case as to why Twitter should change theirs.
His main goal is to “bring back the freedom of speech” on social media platforms without the fear of being kicked off if it goes too far. In the past, there have been many instances where those who have a strong following have used their fans to spread incorrect information or instigate events. People such as former President Donald Trump and former baseball player Aubrey Huff have been permanently removed from Twitter for spreading misinformation. Although Musk has been spreading misinformation for the benefit of his company, it is unlikely that he will be added to the banned list due to his large share hold.
Senior Patrick Ptacek finds humor when scrolling through Twitter but also sees misinformative tweets that many seem to believe. “Today, misinformation is widespread due to social media and differing opinions. When looking for any information it is always important to fact check it with other sources,” he said, “But especially now Twitter has become a source of misinformation which makes it hard to use as a factual source for updates. It becomes harder to find real information than it is to find misinformative tweets. I can only imagine how many incorrect tweets would be out there if there wasn’t a system to remove them.”
He claims his primary focus of change is to add the “edit button” on previous tweets, although from his recent Twitter polls, it seems as though he is more focused on “free speech.” The idea that this new change is for the benefit of all may be true, but it mainly benefits the billionaire himself. Musk has been on the SEC’s radar since his very first misinformative tweet and continues to remain on it with his many infractions. His tweets continue to carry misinformation for the purpose of increasing the success of his business or manipulating the outcome of the market.
Musk does not plan to change his mind about becoming a board member, especially after his offer to buy the entire company on April 14. His offer contains the opportunity to make Twitter a private company by paying $54.20 per share, with a total worth of over $43 billion, while creating the social media site he has always wanted.
Junior Raania Ahmad has been following Musk’s story with Twitter and has made some predictions of her own from the start, “When Musk first announced that he bought the largest amount of shares in Twitter, I knew it was only a matter of time before he wanted to take over the entire business,” she stated. “He has already played a huge role in eight companies and he continues to add more to his list. Eventually he will own mostly everything, creating an empire.”
Even though he is offering a substantial amount of money for the company, Twitter is not 100% on board with Musk taking over. There have been discussions about Twitter increasing the amount of shares within the stock to make it more difficult for Musk to purchase, along with other tactics to dissuade him from turning Twitter into a private company.
Only time will tell if Musk will truly take Twitter private or if it is just another one of his claims that will be proven wrong. His investment has been seen as a way to continue his fight with the SEC, but it may also be a way for people to tweet without the fear of punishment. Whether he takes over Twitter or not, he has already changed the company, for better or worse.
Vince • Apr 18, 2022 at 2:28 pm
I think it would be very interesting if Elon Musk took over Twitter. He discusses that he will make it a private company, but he also teases that he would change the name, or even delete the whole system itself.