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Twitter appoints Elon Musk to board, lifting share prices

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Currently the world’s richest man and with more than 80 million followers on Twitter, Elon Musk has purchased 9.2 per cent of the social media platform’s common stock. AFP

Twitter appoints Elon Musk to board, lifting share prices

Twitter on April 5 announced that Elon Musk will join its board, boosting hopes the Tesla boss will lift the social media company’s prospects as some observers expressed wariness of the billionaire’s influence.

Shares rose for a second day on news of Musk’s board appointment after surging on April 4’s disclosure of the outspoken entrepreneur’s large stake in the company.

“I’m excited to share that we’re appointing @elonmusk to our board! Through conversations with Elon in recent weeks, it became clear to us that he would bring great value,” Twitter CEO Parag Agrawal said in a tweet.

Agrawal called Musk “a passionate believer and intense critic of the service which is exactly what we need”, while Musk said he looked forward to soon making “significant improvements to Twitter”.

Musk, who also leads the SpaceX venture and is the world’s richest man, had the day prior announced his purchase of 73.5 million shares or 9.2 per cent of Twitter’s common stock, sending the company’s value up more than 27 per cent on Wall Street.

Analysts at Wedbush said the invitation from Agrawal marks “a friendly move by the Twitter board to embrace Musk” that could lead to strategic shifts for a company “still struggling in a social media arms race”, according to a note.

Musk had previously questioned the platform’s commitment to freedom of speech – criticism that has now fed hopes among political conservatives who accuse the platform of “censorship” and hope to see former US president Donald Trump returned to Twitter following a lifetime ban in the wake of the January 6 riot last year.

Some progressives expressed discomfort with Musk’s increased say at Twitter, which the Tesla boss has called a “de facto public town square”.

“What could possibly go wrong with an oligarch determining what constitutes free speech?” tweeted former Secretary of Labour Robert Reich, who noted that Musk has “threatened to sue bloggers and fired employees for speaking out about safety concerns”.

Musk will remain on Twitter’s board until the company’s annual shareholder’s meeting in 2024, and he has promised not to take a stake larger than 14.9 per cent in the company during that time, according to a securities filing.

The arrival of Musk cheered several analysts, who have rued the performance of a company that is influential in the political and media worlds but for which profitable growth has proved elusive.

In 2021, Twitter’s revenues were $5.1 billion, up 37 per cent from 2020, but a fraction of the $33.7 billion reported by Facebook parent Meta.

CFRA Research analyst Angelino Zino applauded the arrival of a “true visionary” in Musk.

“Ultimately, the goal is to better monetise the platform, and we think Musk can only help, not hurt the process, with his recent criticism of the company as a refreshing sign,” Zino said, noting that the terms of Musk’s stake mean that he can’t take over the company.

Susannah Streeter, an analyst at Hargreaves Lansdown, offered a more muted outlook, characterising Musk as “socially ambitious” and raising the possibility that the Tesla boss will use the platform to promote his ventures.

“Over the longer term, Twitter investors will want to see that high levels of governance are adhered to, otherwise the independence of Twitter could be questioned, and the risk is that users may start to drift away,” Streeter said.

In the political universe, far-right Republican House Representative Lauren Boebert was among those calling for Musk to “lift the political censorship”.

“Oh... and BRING BACK TRUMP!” she tweeted.

Two days after the January 6 attack on the US capitol, Twitter announced the “permanent suspension” of Trump’s account, citing the “risk of further incitement of violence”.

Historian James Fell was among those trying to pre-empt a Trump Twitter revival, saying if the ex-president is restored, “I’ll probably ditch this platform altogether”.

But others said Musk’s motivation behind the Twitter investment probably has little to do with national politics.

“Twitter is a key resource for him,” said David Kirsch, a professor at the Robert Smith School of Business, who has written extensively on electric vehicles (EV) and modern technology.

Musk currently has more than 80 million followers on the platform, which Kirsch said has likely saved him hundreds of millions of dollars in advertising.

“He is the master of the platform, at a certain point he couldn’t afford not to have a say in how it’s managed,” said Kirsch. “All the politics are secondary.”

Shares of Twitter rose 2.0 per cent to $50.98 trading.

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