Twitter, Inc. (TWTR) filed with the U.S. Securities and Exchange Commission (SEC) today, making Tesla, Inc.'s (TSLA) chief executive officer (CEO), Elon Musk, a member of its board of directors. According to the filing, Musk will serve as a Class II director until 2024. Musk will not be able to hold more than 14.9% of Twitter's outstanding common stock including those in shares, derivatives, swaps, hedges and any other form of financial instrument while serving as a director and for 90 days thereafter.
Musk already holds a 9.2% stake through his purchase of Twitter shares yesterday.
- Twitter appoints Elon Musk to its board of directors for a two year term.
- Musk cannot hold more than 14.9% stock of outstanding Twitter common stock during his term and for 90 days after.
- The appointment is the latest measure by Twitter to meet its goal of reaching 315 million mDAU by 2023.
Twitter's own lacklustre performance since its first IPO has prompted several internal changes in the company, the most recent being the ousting of its founder, Jack Dorsey and the appointment of Parag Agarwal. While Tesla's stock has skyrocketed, Twitter's has languished.
The company has had a goal of reaching 315 million monetizable daily average users (mDAU) by Q4 2023 which it reaffirmed at its latest quarterly results. Twitter reported a 37% increase in revenues in fiscal year (FY) 2021 compared to FY2020 and a loss per share of -$0.28, compared to -$1.44. The board also authorized a $4 billion stock repurchase program at that time.
The Bottom Line:
The investor hype that surrounds Tesla is likely to rub off on Twitter as Musk comes aboard, at least in the near term. The stock spiked yesterday after Musk purchased 9.2% stake in Twitter and is on its way to greater heights today. However, the longer term outlook for Twitter as a result of the closer association with Elon Musk depends on Twitter's ability to turn around its business and the company's ability to survive geopolitical and macro challenges.