Elon Musk Declines Twitter’s Offer to Join Board

According to Twitter TWTR CEO Parag Agrawal, Tesla CEO Elon Musk, who is currently Twitter’s largest shareholder, has rejected Twitter’s board seat offering. While neither the firm nor Musk has yet said why such a decision was made, Twitter’s offer limited his stake in the firm to 14.9%, which may have curbed Musk’s attempt to become more of an active investor and/or take over the firm. Musk may be considering that as a 15%-plus shareholder, he could have much more leverage in disputes with Agrawal about Twitter’s features and overall long-term strategies. As we wrote in our April 4 note, Musk had indicated that he did not agree with the appointment of Agrawal and that he may desire some changes at the firm. Further, with more than 81 million followers on the platform, Musk could more effectively campaign for changes to the platform without limitations. Twitter likely will be pressured to consider his ideas to minimize the risk of losing or aggravating users or pushing Musk to attempt to create a new platform. While the stock entered 3-star territory at the April 4 close after jumping more than 27% following the news that Musk is now its largest shareholder, it has drifted back and is approaching the 4-star level again, which is around $44.50 or lower. Our fair value estimate remains $58 per share.

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