Elon Musk can’t seem to stop trolling Twitter’s management
PremiumHe seems bent on exercising external influence without taking over
Elon Musk wants to buy Twitter. Elon Musk wants to influence Twitter. Elon Musk wants to poke Twitter with a stick until he gets bored. It is hard to know what is inside the head of Tesla’s chief executive officer, who became Twitter’s biggest shareholder and then rejected a seat on the board in an about-face on Saturday. The most realistic prediction about his future actions came from Twitter’s chief Parag Agrawal on Sunday night: “There will be distractions ahead."
Having Musk on the board meant the billionaire could only make trouble from inside Twitter and within strict constraints: Musk’s 9% stake could go no higher than 14.9%. He’d be a class II director until 2024, preventing him from taking over the company’s board. Not only would he be unable to take over Twitter, he likely wouldn’t have much impact on the service either. Yet, snubbing a board seat runs counter to how activist shareholders normally operate. Elliott Management, which owns a large stake in Twitter, pushed to replace CEO Jack Dorsey in 2020 and nominated four directors for the board to give it more sway. But Musk doesn’t go down conventional routes. He can simply tweet a product idea to his 80 million followers over a weekend and get Twitter to speed up changes that may or may not have been in the pipeline.
If buying 9% of Twitter was a capitalist power play, rejecting a board seat was a nuclear drop-kick for the social media era. Musk has put himself in a position where he can now buy significantly more stock. He can push the company on product ideas with the backing of millions of Twitter users. He’s free to bring his stake up to 51% and become majority shareholder. He could launch a hostile bid.
So why were Twitter’s shares trading 7% lower on Monday morning, wiping out gains from the excitement of Musk’s investment? Most likely because investors don’t buy it. Neither do I.
The one thing we know for sure about Elon Musk is that he is unpredictable. But I’ll go out on a limb to make a prediction anyway: Musk probably won’t acquire Twitter. Influencing a company is way more fun for someone like him than being its majority owner. Musk doesn’t buy companies. He builds them from the ground up. With assets already on the market—think Dogecoin, Bitcoin, GameStop or Etsy— he tends to talk them up and inflate their value, before losing interest and moving on. When Musk tweeted that he “kinda loves Etsy" in January last year, the stock jumped 9%. That same day he tweeted “Gamestonk!!" and GameStop’s shares went up by 60%. By the following month, Etsy had slid by 17%, GameStop by around 87%. Musk is great at attracting attention to assets, sprinkling them with his brand of fairy dust that draws in legions of new fans, but he is not great at imbuing those assets with long-term value.
Twitter is admittedly a different story. Musk has spent close to $3 billion to become the social-media firm’s biggest shareholder, and he appears to have had serious discussions with its management. But as someone who has repeatedly thumbed his nose at the US Securities and Exchange Commission, he is badly suited to guiding a social-media business, which increasingly involves heeding new rules from policy makers in Europe and elsewhere.
Judging by his tweets, Musk’s interest in Twitter seems more geared toward influencing the company in a direction that suits his ideological worldview, which, despite his brilliant engineering mind, includes a somewhat warped understanding of what free speech means.
He has, for instance, wrongly propagated the notion that Twitter is a “public square" obligated to protect free speech. As a private company, it is not. In his own business, he has conflated free speech with offensive speech, telling African-American workers to be “thick-skinned" on racist language in a Tesla factory. He also tweeted a meme comparing Canadian Prime Minister Justin Trudeau with Adolf Hitler last February.
In March, as he was quietly amassing shares in Twitter, Musk polled his followers with a loaded question about free speech. That kind of discussion is important in its own way, but none of it is helpful to Twitter as a company. Posting inane polls to millions of fans is a distraction, as Agrawal rightly said, not a smart way to steer an online product.
At best, Musk is trolling Twitter’s management. At worst, he wants to push the company to loosen its new moderation standards, giving him more leeway to tweet about whatever topic—from GameStop to Tesla and SpaceX—has or needs his attention. Somewhere in the middle, he’s turning Twitter into a volatile meme stock that could jump or slide in tandem with his state of mind. If history suggests anything, Musk is more likely to make trouble for Twitter than put up a bid.
Parmy Olson is a Bloomberg Opinion columnist covering technology.