Elon Musk sued by Twitter shareholders: war is declared

Definitely, there have been more spectacular twists on Twitter for ten days than in an entire season of Lights of Love. The latest episode, this Tuesday, April 13, launches the response of some shareholders of the social network against Elon Musk, the extravagant billionaire who seems determined to be a troublemaker.

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One of them, Marc Bain Rasella, has gathered shareholders to file a collective “fraud” complaint with the US stock market regulator, the Securities Exchanges Commission (SEC). They accuse Elon Musk of artificially keeping the price of the Twitter share low, not revealing his rise in the social network capital in time.

Did Elon Musk knowingly forget to come out to take advantage of Twitter’s price weakness?

In fact, from the moment in which Elon Musk exceeded 5% of the capital, which took place on March 14, he was legally obliged to declare this opening to the SEC within ten days, that is, by March 24. But he waited to go up to 9.2% of the capital to complete the famous case, entitled “Table 13”. Elon Musk complied with April 4, ten days late. And during that time, the Tesla and Space-X boss went from 5% to 9.2% stake in the blue bird.

Hence the anger of shareholders, some of whom sold all or part of their shares during this period from March 24 to April 4. Given that the announcement of Elon Musk’s rise in the company’s capital led to a sharp rebound in the value of its stake (+ 27% in one day), these shareholders believe that the billionaire’s “oblivion” prevented them from profit from rising prices, and that would allow the entrepreneur to continue buying shares at an artificially low price. However, the price increase would certainly have been less strong with moss at 5% rather than 9.2%.

Ten days of great tension on Twitter

This offensive by some shareholders – their number is not yet known – has further increased the pressure within Twitter since Elon Musk became its largest shareholder. From provocations to provocations, relations between Twitter management and the richest man in the world are deteriorating at great speed, to the point where one wonders if war has not finally been officially declared.

The first episode dates back to Monday 4 April. That day, Elon Musk announced to everyone’s surprise that it had acquired 9.2% of the capital of the social network, for nearly $ 2.9 billion, becoming the first shareholder. In his letter to the SEC, he specified that he had no intentions become an activist shareholder. But it is impossible to ignore that since January, which corresponds to the purchase of his first Twitter shares, the whimsical entrepreneur has multiplied criticism of the social network, accusing it of gagging freedom of expression and openly criticizing its management by Parag Agrawal, CEO since last November and the departure of its founder and emblematic CEO, Jack Dorsey.

The gallery then I asked myself:Would Elon Musk prefer to invest in a well-known social network, despite the growth problems, and thus “influence” the direction of an established company and platform, rather than create one from scratch? “

Elon Musk didn’t wait long to confirm his interventionist will. That same evening he launched his first offensive: a survey to find out if users want to be able to edit their tweets later. harmless? Not exactly. Because if it’s an old and popular request among Twitter users who want to be able to correct their mistakes when they write in a hurry. Jack Dorsey’s former management objected fiercely due to potential abuse related to harassment or misinformation online. The founder had thus declared in 2020 that the button “modify” I would not see “probably never” the day.

The new management was less closed. Twitter then hired a project manager in 2021 to develop and test this feature, which was announced on April 1, 2022 as a joke. Subsequently, Parag Agrawal clarified that discussions in the previous weeks with Elon Musk impacted this decision which could drastically change the user experience.

Council offensive

On Tuesday 5 April, the day after the announcement of Elon Musk’s capital increase, Twitter offered its new first shareholder – also accused of possible price manipulation by the financial markets policeman for comments released on the social network – a place in the board of directors of the company.

CEO Parag Agrawal announced it in a tweet: “I am thrilled to share that we are appointing Elon Musk to the board! Through conversations with Elon over the past few weeks, it had become clear that he would bring great value to our Council. ” He explained. Elon Musk then replied, always in public: “I’m looking forward to working with Parag and the Twitter Board to make major improvements to Twitter in the coming months! “

But was it a victory by Elon Musk and a subjugation by Parag Agrawal, or was it a poisoned gift aimed at containing the aggression of the new first shareholder? Because by accepting a position on the board of directors until 2024, Elon Musk has thus prevented himself from rising to more than 14.9% of the company’s capital. He certainly could have tried to influence the company’s strategy through the board of directors – and his strike force, thanks to his 80 million followers, is real – but most of him would still have to validate requests for. he.

A weekend of provocative messages

For a few days, Elon Musk seemed to be choosing the option of lobbying the board of directors by massively “trolling” the social network. On Thursday he posted a “meme” with a famous photo in which we see him holding a joint in a halo of smoke, with the caption: “Lthe next Twitter board is about to tear“He also agreed to meet with Twitter employees for a question and answer session, as if he were the new leader of the company.

Saturday came under even more pressure. Is Twitter Dying?he asked, illustrating his point of view from the fact that most of the social network’s “super accounts” – those with the most subscribers like Barack Obama, Justin Bieber, Taylor Swift, Rihanna, Lady Gaga … – publish rarely contained.

Even more “trolls”, Elon Musk posted two more tweets over the weekend, which must have stuck in Parag Agrawal’s throat. The first was a survey, with options“yes” or “obviously” to the question “Should the “w” be removed from Twitter?“. In the second, he suggested that”convert Twitter headquarters in San Francisco into a shelter for the homeless“, car “nobody goes there anyway” [sic].

open warfare

And then, finally, Elon Musk has – again – changed his mind. On Monday, April 11, he turned down his seat on the board of directors. And not in the most elegant way: according to a message from CEO Parag Agrawal, the second richest man in the world Forbes he simply opposed the leaders when he publicly hinted that he would sit down.

Elon’s appointment to the board was supposed to go into effect on April 9, but Elon told us the same day that he would not be joining.“Wrote Agrawal, before adding: Elon is our largest shareholder and we will remain open to his ideas“. An hour after the CEO’s message, the headmaster concerned contented himself with replying by posting the emoji.”giggle“… without further comment.

From now on, space for the response of some shareholders in court with the regulator of the financial markets. Neither Elon Musk nor Parag Agrawal reacted, the first not to post on the social network since 11 April. What will his next move be?