Investors have become accustomed to Elon Musk, Tesla's (TSLA) chief executive, making spectacular announcements.
He has a knack for surprising them when they least expect it. But what he seems to like even more is the game of cat and mouse with the business community. The billionaire likes to keep everyone guessing what his next move is going to be.
He just proved the point again with Twitter (TWTR).
On April 4 the richest man in the world disclosed in a Securities and Exchange Commission Form 13G that he held 9.2% of Twitter. By choosing this particular form for the disclosure, Musk implied that he was going to be a passive holder who would not influence the San Francisco microblogging company and would not try to take control of it.
Now, financial disclosure rules require an investor to disclose a holding above 5% within 10 calendar days. Musk waited 21 days before filing on his stake.
On April 5, the tech tycoon made a U-turn by filing a Form 13D with the SEC. This form suggested that he was going to be an active shareholder; in other words, he would probably push the company to adopt strategic actions for growth.
One open question is whether the SEC will investigate this matter.
Agreement, No Agreement
Twitter management and Musk reached an agreement that named him to the board beginning April 9. In exchange, the tech executive agreed not to acquire more than 14.9% of Twitter before 2024. Musk could thus influence the company but could not take control of it for two years.
Twitter is under pressure from the activist hedge fund Elliott Management to increase its revenue and the number of monetizable users.
The platform wants to reach 315 million average monetizable daily active usage -- its measurement for advertisers -- and $7.5 billion or more revenue by the end of 2023. Revenue in 2021 was $5.08 billion.
In fourth-quarter 2021 mDAU grew 13% to 217 million. MDAU refers to users who come to Twitter every day and use the platform and applications, where they may be exposed to advertising.
But just when everyone thought everything was settled, everything went back to square one.
Parag Agrawal, the CEO of Twitter, said on April 10 that Musk had given up his seat on the board. Neither man explained why Musk wasn't continuing as a director. Regardless, the decision means Musk can acquire more Twitter stock.
The question on every Twitter investor's lips now is: What will Elon do?
Will he continue to acquire Twitter shares till he acquires at least 50% plus one share of the platform? Will he sell his shares?
"There will be distractions ahead, but our goals and priorities remain unchanged," Twitter CEO Parag Agrawal told Twitter's employees.
Will Musk Go Hostile? All Options on the Table.
For Musk's part, he has not yet said whether he will launch an offer for Twitter.
But what is striking is that he has deleted many tweets he'd dedicated to the platform on April 10.
The deleted tweets were about possible changes at Twitter. One was a poll asking Twitter users whether Twitter's San Francisco headquarters should be turned into a homeless shelter. (Musk's rival as a tech entrepreneur, Amazon (AMZN) Executive Chairman Jeff Bezos, had also responded to this tweet. He found the idea good.)
Another was also a poll, in which Musk asked whether to remove the W from Twitter.
Musk has just sent a new document to the SEC. In this document, he discloses nothing of his intentions and leaves the door open to all possibilities.
"Depending on the factors discussed herein, the reporting person may, from time to time, acquire additional shares of Common Stock and/or retain and/or sell all or a portion of the shares of Common Stock held by the Reporting Person in the open market or in privately negotiated transactions," the billionaire wrote.
He added that he may also decide to "distribute the common stock held by the reporting person to other entities."
"Any actions the reporting person might undertake will be dependent upon the reporting person’s evaluation of numerous factors, including, among other things, the price levels of the common stock, general market and economic conditions, ongoing evaluation of the Issuer’s business, financial condition, operations and prospects, the relative attractiveness of alternative business and investment opportunities, investor’s need for liquidity, and other future developments."
Musk, however, suggests that he does not currently intend to carry out any of the transactions described below but may change his mind at any time.
"The reporting person reserves the right to change his plans at any time, as he deems appropriate," he warned.
The billionaire indicates that he does not exclude discussions with Twitter's board and may continue to express his views on the company on social media and other channels with respect to the company's product-and-service offerings.
"From time to time, the reporting person may engage in discussions with the board and/or members of the issuer’s management team concerning, including, without limitation, potential business combinations and strategic alternatives, the business, operations, capital structure, governance, management, strategy of the Issuer and other matters concerning the Issuer," Tesla's CEO said.
Dan Ives, an analyst at Wedbush Securities, says the billionaire could well go hostile.
"We believe the Twitter Board and Musk could not come to an agreement around Musk's communications with the public," he said.
"This now goes from a Cinderella story, with Musk joining the Twitter board and keeping his stake under 14.9%, to likely a 'Game of Thrones' battle in the months ahead, with the high likelihood that Elon takes a more hostile stance."
Musk has enough money to buy Twitter. According to Bloomberg Billionaires Index, his net wealth is estimated at $260 billion as of April 10. Twitter's market capitalization is $37.65 billion at last check.
