Updated: April 11, 2022 11:08 AM EDT | Originally published: April 8, 2022 11:52 AM EDT

One of corporate America’s most notable loudmouths has acquired the largest stake in the home of online loudmouths: Twitter, the microblogging platform. Of course, the person in question is multi-billionaire Elon Musk, the wealthiest person on earth, worth a staggering $288 billion.

The day after his news-making investment, on April 5, Twitter announced that Musk would also be joining its board of directors. That raised questions about what his role will actually look like. But things changed no sooner had the world got its head round Musk’s potential new role. On April 9, Musk told Twitter he wouldn’t serve as a director. Here’s more about what his stake in Twitter could mean, and what he may have the power to potentially do.

What is a passive investor?

The initial news that Musk had acquired 9.2% of the company’s stock indicated he would be a passive investor. That means he would not be taking an active role in the running of the company. It also means he would be like any other Twitter stock-holder who hoped to see gains in the value of the shares. That “passive” category covers most investors in most Wall Street stocks.

Soon after his stock purchase was revealed, it also emerged that Musk would take a seat on the board of directors. There was one proviso. He wouldn’t be able to increase his holdings of Twitter stock above 14.9% until his term as a director ended in 2024. That also took the chance of an all-out buyout off the table for the immediate future, Zino says. All-out buyouts could involve Musk purchasing all the shares outstanding or buying a majority of the shares. Either way, he’d be in control of the company. That would still likely involve the company maintaining a board of directors, experts say.

However, the weekend news that Musk is once again off the board means he could purchase more than 15% of the stock and is now able to mount a takeover of the company, if he chose to do so. Musk surely has the funds to purchase the entire enterprise and Zino doesn’t rule out a complete take over eventually.

Read More: Elon Musk Decided Not to Join Twitter’s Board After All, CEO Says

What Musk can do now

Taking a position on the board of directors would have let Musk, along with the other 11 directors, steer the company’s business strategy and make decisions on financial matters. The board’s role also involves making decisions on what to pay the CEO and whether to renew executive employment contracts.

In short, being a director would have allowed Musk “to pick up the phone and speak with the management team,” Zino says. “There’s not a management team that won’t take that call.”

But even without that official role, it’s likely Musk has the ear of Twitter executives. Plus, he has a huge Twitter following of more than 80 million and a massive media presence through which he can share his ideas. “He has an incredible power to push things around,” says David Morrison, senior market analyst at online trading platform Trade Nation in London. “He would like to change it to be better for him. Whether that is what everyone else thinks is a different matter.”

Musk already suggested the addition of an edit button to the microblog. That would put the site in line with Facebook’s practice.

Read More: 2021 Person of the Year: Elon Musk

Musk’s behavior on Twitter

Musk has had run-ins with the Securities and Exchange Commission for alleged securities law violations. For instance, in 2018 he declared on his Twitter feed that he’d take Tesla private at a high stock price and had the funding ready to do so. But that didn’t happen. As a result the SEC sued Musk. Eventually Musk agreed that future tweets would need to be prewritten by company lawyers. In turn, Musk retorted that the regulator was restricting his free speech.

Twitter has also been criticized for its inconsistent muting of certain speech on the platform. That perceived muzzling of varying views may be something Musk wants to change, given his apparent love of unfettered communication. “What is allowed and what is blocked doesn’t seem to be consistent,” Morrison says. “It seems one side is allowed to say what it wants while the other side can’t.”

Musk also seems to like being a minor rascal, Morrison says. “He’s been a loudmouth in the past, but more recently, it’s more mischief,” Morrison says. That naughty behavior has often revolved around what corporate communication can occur on Twitter or similar platforms. The SEC has said it is ok to release financial data or other news that could move a stock price on social media, but the company must announce ahead of time which platforms it will use to do so. Still, Musk seems to push the envelope when it comes to SEC regulations. “He and the SEC are having these running battles.”

In the recent instance, Musk organized a poll on Twitter soon after he’d already purchased his 9.2% stake in the company. Regulations say he should have revealed the purchase at an earlier date. The idea behind the SEC disclosure mandate is to alert investors with full information about who is buying a significant stake in a company and when they were doing it. Such information helps other investors make informed decisions about whether to buy or sell stock.

So what’s the downside to such possible infractions? In the region of a $100,000 fine, according to CNBC. That’s not much to pay for some mischief if you are Musk.

What does this move mean for Twitter?

Twitter stock has been a massive disappointment for investors, lagging behind both the market and its direct competitor Meta, owner of Facebook. “It has been this highly underperforming asset essentially since it became public,” says Angelo Zino, technology analyst at CFRA. “They’ve had an extremely difficult time in terms of monetizing the platform – essentially, they can’t find enough advertising money.” The platform gets approximately nine-tenths of its total revenue from selling advertising.

The company’s market performance reflects the lackluster state of the underlying business. From when Twitter stock debuted on the stock market until earlier this week it lost more than 7%. That compares to gains of over 370% for Meta and 260% for the tech-heavy Nasdaq index over the same period, according to data from Yahoo.

But when news broke April 4 that Musk bought 9.2% of the outstanding Twitter shares, the price of the stock rallied in its best daily gain since 2013. The move inspired some investor optimism that Musk’s stake might invigorate the ailing company. Further news that Musk had taken a seat on the company’s board helped reinforce the sunnier outlook. However, news that he wouldn’t be taking up his role on the board sent shares down on April 11. The stock was off 0.75% at $46 a share by mid morning and down more than 10% versus the market opening on April 7.

This story has been updated with news of Musk’s decision not to serve on the board.

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