Absolute power: Twitter grapples with an Elon Musk problem

New York: Bright and early on Monday, Elon Musk sent the government a surprising new document. In it, the world’s wealthiest man laid out his possible intentions toward Twitter, in which he has amassed a 9.2 percent stake, underlining how drastically his position had changed from a week ago.

Musk could, if he chose, buy more shares of Twitter and increase his ownership of the company, according to the document, which was filed with the Securities and Exchange Commission.

He could freely express his views about Twitter on social media or other channels, the document noted. And he reserved the right to “change his plans at any time, as he deems appropriate.”

It was a promise — or perhaps it was a threat. Either way, the filing encapsulated the treacherous situation that Twitter now finds itself in.

Musk, 50, Twitter’s largest shareholder and one of its highest-profile users, could very well use the social media platform against itself and even buy enough shares to take over the company.

“Twitter has always suffered more than its fair share of dysfunction,” said Jason Goldman, who was on Twitter’s founding team and served on its board of directors in the past.

“But at least we weren’t being actively trolled by prospective board members using the product we created.” The filing followed a week of high-stakes drama between the billionaire and the company.

Last Monday, Twitter revealed that Musk had accumulated stock, now worth more than $3 billion, in the company. A day later, he was invited onto Twitter’s 11-person board and agreed to not own more than 14.9 percent of the company or take it over. Then on Sunday, Twitter abruptly said all of those bets were off and that Musk would not become a director.

What exactly went on between Musk, who has more than 81 million followers on Twitter, and the company’s executives and board members is unclear. But it leaves Twitter — which has survived founder infighting, boardroom revolts and outside shareholder ire — with an activist investor unlike any other.

Musk, who also leads the electric carmaker Tesla and the rocket company SpaceX, is known for being unpredictable and outspoken, often using Twitter to criticize, insult and troll others. By no longer joining the board, he liberated himself from corporate governance rules that would have required him to act in the best interests of the company and its shareholders.

Musk leaned into that freedom after his decision was communicated to the company on Saturday morning. He proclaimed on Twitter that he was in “goblin mode” and suggested changes such as removing the “w” from the company’s name to make it more vulgar and opening its San Francisco headquarters to shelter the homeless. He later deleted some of the posts.

“This is not typical activism or, frankly, anything like activism that we’ve seen before,” said Ele Klein, co-chair of the global Shareholder Activism Group at the law firm Schulte Roth & Zabel. “Elon Musk doesn’t do things that people have seen before.”

Patrick Gadson, co-head of the Shareholder Activism practice at Vinson & Elkins, another law firm, said he felt sympathy for Twitter. “I would never want any director that I represent, or any director at all, to have to deal” with this situation, he said.

Twitter is particularly susceptible to activists, analysts said, because its founders did not structure the company’s shares in a way that gave themselves more control. The founders of Google and Facebook have maintained voting power over the shares, providing them with an outsize grip over the direction of their companies.