Elon Musk sued by Twitter shareholders: war is declared

There have been decidedly more spectacular Twitter twists in ten days than in an entire season of Lights of Love. The latest episode, this Tuesday, April 13, launches the response of certain shareholders of the social network against Elon Musk, the capricious billionaire who seems determined to play troublemakers.

One of them, Marc Bain Rasella, federated shareholders file a collective complaint for “fraud” with the US securities market regulator, the Securities Exchange Commission (SEC). They accuse Elon Musk of having kept Twitter’s share price artificially low, by not disclosing his rise in the social network’s capital on time.

Did Elon Musk knowingly forget to declare himself to take advantage of Twitter’s price weakness?

In fact, from the moment that Elon Musk exceeded 5% of the capital, which happened on March 14, he was legally obliged to declare this threshold crossing to the SEC within ten days, that is, on March 24 to latest. But he waited until it rose to 9.2% of the capital to complete the famous dossier, entitled “Annex 13”. Elon Musk delivered on April 4, ten days late. And during this time, the capo of Tesla and Space-X went from 5% to 9.2% of the capital of the blue bird.

Hence the anger of the 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 the rise of Elon Musk to the company’s capital meant a strong rebound in the value of its share (+27% in one day), these shareholders believe that the billionaire’s “forgetfulness” prevented them from taking advantage. the rise in prices, and which would have allowed the businessman to continue buying shares at an artificially low price. However, the increase in price would certainly have been less strong with a 5% instead of 9.2% musk.

Ten days of great tension on Twitter

This offensive by certain 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 the Twitter leadership and the richest man in the world deteriorate rapidly, to the point that one wonders if war has not finally been officially declared.

The first episode dates from Monday, April 4. That day Elon Musk announced to everyone’s surprise that it had acquired 9.2% of the capital of the social network, for almost 2,900 million dollars, becoming its first shareholder. In his letter to the SEC, he specified that he had no intention become an activist shareholder. But it is impossible to ignore that since January, which corresponds to the purchase of his first Twitter shares, the capricious businessman has multiplied criticism of the social network, accusing it of muzzling freedom of expression and openly criticizing its management by Parag Agrawal, the CEO from the past. November and the marginalization of its founder and emblematic CEO, Jack Dorsey.

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

Elon Musk did not wait long to confirm his interventionist will. That same night, he launched his first offensive. : a survey to find out if users want to be able to edit their tweets afterwards. harmless? Not really. Because if it is an old and popular request among Twitter users who want to be able to correct their mistakes when they write in a hurry. It was fiercely opposed by Jack Dorsey’s former management due to potential abuses related to online harassment or misinformation. The founder had thus declared in 2020 that the button “Edit” I wouldn’t see “probably never” the day.

The new address was less closed. Twitter had thus 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 previous weeks with Elon Musk had influenced this decision that could drastically change the user experience.

board offense

On Tuesday, April 5, 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 market police for comments made on the network social- a seat on the company’s board of directors.

CEO Parag Agrawal made the announcement in a tweet: “I am delighted to share that we are appointing Elon Musk to the board! Through conversations with Elon over the past few weeks, it was clear that he would bring tremendous value to our Board.” He explained. Elon Musk responded then, still in public: “I look forward to working with Parag and the Twitter Board to drive major improvements to Twitter in the coming months!”

But was it a victory for Elon Musk and a submission for Parag Agrawal, or was it a poisoned gift intended to contain the aggressiveness of the new first shareholder? Because by accepting a seat on the board of directors until 2024, Elon Musk thus avoided 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 the striking force of him, thanks to his 80 million followers, is real, but most of him would still have had to validate his requests.

A weekend of provocative messages

For a few days, Elon Musk seemed to opt for the option of pressuring the board of directors by massively “trolling” the social network. On Thursday he posted a “meme” with a famous photo of him holding a joint in a halo of smoke, with the caption: “IThe next Twitter forum is going to breakHe also agreed to meet with Twitter employees for a question-and-answer session, as if he were the company’s new leader.

On Saturday, he went even further in the pressure. Is Twitter dying?he asked, illustrating his point with the fact that most of the social network’s “super accounts” – the ones with the most subscribers like Barack Obama, Justin Bieber, Taylor Swift, Rihanna, Lady Gaga… – rarely post content.

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

open war

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

Elon’s appointment to the board was supposed to take effect on April 9, but Elon told us the same day that he would not be joining.Agrawal wrote, before adding: Elon is our largest shareholder and we will remain open to his ideas.“. An hour after the message from the CEO, the director in question was content to respond by posting the emoji”giggle“…no further comments.

From now on, place to the answer of certain shareholders in court before the regulator of the financial markets. Neither Elon Musk nor Parag Agrawal reacted, the first without posting on the social network since April 11. What will be his next move?