What's up guys and welcome back to wall street millennial on this channel, we cover everything related to stocks and investing things are not going well for twitter, specifically for its board of directors. On top of a history of underwhelming financial performance that culminated in an activist investor forcing itself onto the board its own co-founder and former ceo has publicly voiced his lack of respect for the board, and now even members of congress are stepping in to punish them. A group of 18 republicans sent a letter to each of the board members, essentially accusing them of putting their own political agendas ahead of shareholder interests. The letter demands that they start preserving records of all their negotiations with elon musk, so that in the future they could potentially be investigated to see if they were in fact working in the interest of shareholders.

Given how little of twitter stock the board owns less than one percent collectively outside of jack dorsey, it seems like a reasonable concern that the board is not aligned with shareholders and now that there is someone offering to buy all twitter shares at a sizable premium. The issue will have an immediate consequence worth tens of billions of dollars in today's video we're going to go over the details of what this group of congress members is demanding why there is so much controversy around twitter's board of directors and just how much trouble they Are now finding themselves in before we dive in make sure to subscribe to our free podcast the wall street millennial podcast? The great thing about the podcast is that you can listen to wall street millennial content without having to be at your computer or watching youtube on your phone. This way, you can listen to our content on the road while waiting in line at the store or anywhere else just search for wall street millennial in spotify or apple podcast. On friday april 22nd, a group of 18 members of congress sent a letter to each of the board members at twitter.

The letter had three major points. The first is that twitter and other social media companies have become america's new town square in the modern world. Much more public opinion and debate takes place in online platforms such as twitter, that otherwise would have happened in town squares before the days of the internet. The second point is that twitter has been engaged in what they call heavy-handed censorship on their platform.

They believe that twitter has been using its power to stifle opinions and views which it disagrees with. The final point in the letter is that the board of directors has a fiduciary duty to act in the best interests of shareholders. They're concerned that the board's oppositions that elon musk's offer to purchase twitter shows that they are more concerned with their own progressive agendas than the interests of shareholders. In the letter they say quote, twitter has increasingly engaged in heavy-handed censorship to silence prominent voices and stifled views that disagree with the prevailing progressive consensus.

Unquote as a de facto town square in modern day america, the members of congress say that twitter and other social media companies are hugely important for public discourse. If a large portion of political discussion debate and disagreement is now happening on twitter, it is important for the platform not to impose any bias on what opinions are represented in any direction. It's very difficult for anyone to prove that this is happening on twitter, but it is a widely held view. Among many people that twitter's leadership has a progressive agenda that sometimes manifests itself in the form of censorship.

It would be extremely difficult and pretty much unprecedented for a company like twitter to be in any way forced to stop all forms of censorship, but not acting in the best interests of shareholders is a comparatively much easier thing to make a case for, and that's what The core of this letter aimed to do it voiced concern over what they perceive as the board of directors. Opposition to elon, musk's, hostile purchase, offer saying quote: twitter's board members have fiduciary duties to the company's shareholders. These duties apply. Despite how many corporations leaders increasingly pursue progressive policy goals divorced from shareholder interest? Unquote, although the accusations and implications of the letter are scathing, the actual impact on twitter is minimal, at least for now.

They demand that twitter start keeping and preserving records of all communications and materials relating to elon musk's purchase, offer that includes any negotiations and, importantly, any decision making processes that impact. Whether or not the company ultimately accepts musk's offer. It also encompasses any communications done on personal electronic devices, not just official correspondences. It notes that negligence is not an excuse for not preserving these records.

This letter, although is intensely accusatory, is likely more for optics than real impact. The 18 republican members of congress who signed the letter will undoubtedly gain credibility among their constituent bases for being perceived as taking a hard stand against a progressive tech company. That being said, it does have the very real effect of forcing twitter to be cautious in its negotiations with musk. If, in fact, they do let non-economic factors affect their ultimate decision, they now may have to answer for it, either at a congressional hearing or even in the courtroom.

But republican members of congress aren't the only high-powered people who have taken issue with how the board has handled elon's takeover offer. The company's own founder and former ceo jack dorsey ripped the board of directors following the announcement that the company had adopted a so-called poison pill, shareholder rights plan to resist elon musk dorsey responded to a tweet by another silicon valley, founder that said, having the wrong people On the board of a company can cause billions of dollars of value to evaporate. Dorsey responded quote big facts. Another response pointed the finger at the chaos specifically on twitter's board.

Going back to the early days and dorsey responds to that one saying: it's consistently been the dysfunction of the company. The consequences of this dysfunction can be clearly seen in the financial results of the company, while revenue has grown slowly but steadily over the past decade. Total costs and expenses have too on a quarter to quarter basis. They do have stretches where it might sometimes seem like they're.

Finally, during the quarter on profitability, but from looking at a historical chart of the revenue and profit over the past several years, it's clear that something big has to change if they are to become as profitable as some of their social media appears. This underperformance at the company has led to a tense relationship between twitter and jack dorsey. His history with twitter is complicated, to say the least, although he is one of the co-founders, he has been either fired or otherwise ousted as ceo twice. The first time was in 2008, when he was fired as ceo for spending too much time on personal pursuits such as yoga.

A consequence of that firing was that he lost a large portion of his stake in the company in 2015. He was reappointed as temporary, ceo and eventually permanent ceo. However, in 2020 activist hedge fund, elliot management built up a stake in the company and gained a board seat. Using this board seat, they attempted to oust dorsey from the company again due to twitter's lack of progress on growth and profitability in late 2021.

They got what they wanted. Although dorsey said that leaving the position was his own choice, not elliot's. Despite this jack, dorsey is still the single largest shareholder of twitter on the board of directors owning about 10 times more stock than the rest of the board. Members combined.

This may well have contributed to his discontent with the boar's resistance to elon musk takeover bid, which would give 10 to 20 upside to the stock price. If the board were to accept the proposal, jack dorsey would benefit to the tune of hundreds of millions of dollars. Based on his stake in the company, but perhaps the most controversy around twitter is its censorship activities. Censorship is an extremely fragile topic when it comes to a platform as consequential as twitter, you don't want to alienate certain viewpoints at the expense of having a non-biased platform, but at the same time you do have some responsibility to prevent illegal and otherwise harmful content.

In early 2021, following the january 6th capital riot twitter, primarily booted donald trump, from the platform, although, as ceo dorsey defended the decision, he also said that he felt is such a dangerous precedent. The fact that he was even willing to say that is telling is basically admitting publicly that twitter's actions were approaching a threshold of being unacceptable public ceos of large corporations almost never say things that critical of their own companies, elon musk, seems to share the same views Of twitter's board, as dorsey does in fact, musk seems to have a good relationship with dorsey going back several years in late 2020, dorsey was under fire from shareholders who wanted him out, as well as a senate commerce committee who grilled several big tech firms about their Roles in content, moderation around this time, elon musk tweeted his support of dorsey, saying that dorsey has a big heart now, with dorsey no longer ceo and seemingly reducing his involvement in twitter, it seems like the perfect time for musk to take over for him all. This is bad news for twitter. The company has been stagnant for the better part of the past decade, unable to strain together, multiple profitable quarters.

The board keeps saying that they have a plan that they're turning the page on the company's performance, but has never happened. On top of that, they've been lumped into the group of big tech, which is loaded by politicians on both sides of the aisle combine that, with a founder and long time, ceo, who doesn't believe in the board of directors and the world's richest man. Trying to do a hostile takeover and the company, as it's put together today, is in deep trouble either. We'll see major change in the coming weeks or months or twitter stock will continue its deterioration of the last decade with no signs of a turnaround.

Alright guys that wraps it up for this video, what do you think will be twitter's ultimate fate? Do you think they'll agree to a buyout from musk? Let us know in the comments section below, as always. Thank you so much for watching and we'll see in the next one wall, street millennial signing out.