Hey guys, it's sasha twitter has decided to start a war with elon musk and unfortunately, for twitter's management. This is a war. They ain't going to win late last night at 8, 13 p.m. Local time in san francisco, on a sunday evening, parag agrawal, the guy, who has been the ceo of twitter for about two minutes since jack dorsey left posted this from his twitter account team, elon musk has decided not to join our board.

Here is what i can share about what happened, and this is much bigger news than many analysts have realized. I am going to explain exactly why i'm also going to explain what i think this means for twitter and what the options for elon musk's next steps are, and then i'm going to explain the new ones for why. I think elon is actually doing this. That's where it's going to get really juicy, so listen up for that.

But first, let's look at what happened so paragraph, while the ceo of twitter, who has not worked literally anywhere else other than a couple of international placements a long time ago, has just been appointed. Ceo of twitter about five months ago and his massive inexperience is now beginning to show, because i have a funny feeling: parag isn't going to be seeing through his first anniversary as twitter boss. So he opens his statement by saying. Elon has decided not to join our board, and then says here is what i can share about what happened.

So you can already tell this. One is going to be juicy for two reasons. One elon made no secret of how interested he was in joining twitter's board to make real change in the platform he literally tweeted a number of times, including after all of this has happened. How much change he wanted to make and asked people questions about new features.

So when a few hours later parrot goes and says, elon decided not to join a board. It smells a lot like cow poop. But then he's saying here is what i can share about what happened, and that naturally implies that there is a whole lot of stuff that happened, that he unfortunately cannot share very careful choice of words. But let's quickly read the official version and then i'm going to give you the behind the scenes, the board and i had many discussions about elon joining the board and with elon directly, we were excited to collaborate and clear about the risks.

We also believe that having elon as a fiduciary of the company, where he like all board members, has to act in the best interests of the company and all our shareholders was the best path forward. The board offered him a seat, so you can already see where this one is going. We believed that having elon was the best path forward and in the middle of that sentence he then qualifies it by saying where elon has to act in the best interests of the company and all our shareholders. So they offered him a seat based on that qualification.

But what happened next? Well, presumably the qualification wasn't met. He says we announced on tuesday that elon would be appointed to the board contingent on a background check and formal acceptance all right. First, why would you include such a basic formality that is completely irrelevant and is not in any way necessary like having a background check in this very concise and short statement, unless you plan to use it potentially at some point in the future as an argument, maybe In some kind of legal case, literally, every appointment of every employee and every board member at this sort of company would naturally come with a background check. It's part of the basics of making it happen, and you know what it is completely not customary to mention it, especially when the ceo is writing a two or three paragraph tweet about appointing a board member.

So parag is already digging his defensive trenches, because this is where he is going to claim. Elon fell flat. Formal acceptance is a reference to elon decided not to join the thing that he said at the beginning. Remember that in the previous paragraph, parikh said that they had quote many discussions and with elon directly, so i am guessing they kind of knew his position on the back of that before they made that move but made the move anyway.

Big mistake. He then says: elon's appointment to the board was to become officially effective april 9th, but elon shared that same morning that he will no longer be joining the board. Oh interesting, because it is the morning of april the 11th, as i'm recording this video and the incompetent twitter tech team, has actually pushed the change to the company's investor website. Anyway, if you look at their list of board members, elon musk is right in there as i'm recording this video.

So presumably they were expecting him to join, or maybe they didn't, but they were trying to play a move. Okay, then parag signs his termination letter because next he says i believe this is for the best. We have and always will value input from our shareholders. Whether they are on our board or not.

Elon is our biggest shareholder and we will remain open to his input. You can already see what happened since the announcement. Elon went on a massive spree of criticisms and suggestions for the platform. He said that nobody turns up to the hq and it is empty, so perhaps it should house homeless people.

Instead, he questioned the ability of the team to cut out the bots on the platform and he asked questions on why the page twitter, blue membership offers next to zero value, all extremely valid questions. But i guess that the ceo and the rest of the twitter board got massively butthurt, because somebody had the goal to point out the obvious. Now, let's finish this statement before we get to the analysis, there will be distractions ahead, but our goals and priorities remain unchanged. Thanks for these suggestions, elon, but you can go and do one that's what that sentence says the decisions we make and how we execute is in our hands and no one else's.

Oh, my god. This guy decides that he's going to take the fight to elon. Suddenly it is evidently clear why elon isn't joining the board. It's because the people on the board don't want to enact the change that elon wants them to.

They are too proud to admit that there may be ways in which twitter could be operated better, maybe could be run better too, but hurt when someone points out that maybe they have made mistakes or taken the company in the wrong direction. Parag ends with let's tune out the noise and stay focused on the work and what we're building and here is the all-important background. Elon musk, acquired 9.1 of twitter shares buying them every day. From the 31st of january to the 1st of april, he crossed the 5 threshold of the total twitter shares on march 14th and should have filed a form to the sec within 10 days to notify him of his large position.

He didn't do that and his traders continued buying shares right up to the beginning of april and he instead filed the form of april the 4th. Now a whole bunch of youtubers came out and said that he did it to save on tax and he made a little bit of money, but the guy has a few hundred billion. I actually think that these people don't understand the game of chess. That elon is playing.

Let me explain this move. Mental share price did not explode when he was still buying yeah, that is kind of part of it, and he probably is going to receive a fine from the sec, but fines for this type of transgression are somewhat like pocket change to elon musk. But here is how elon musk actually played the twitter board. He filed that form 13g on april 4th announcing that he is now by far the largest twitter shareholder, the very next day on april 5th, twitter goes and files an 8k form with the sec.

In that 8k they say that they have offered elon musk a place on the board as a class 2 director and elon musk is not allowed to own more than 14.9 percent of twitter stock. According to this agreement, if he takes that position now, elon musk didn't react to this announcement at all, which is kind of interesting in itself. But you can see what happened. The twitter board got very scared and decided to try an appeasement strategy on either musk and let him become a board member, but only with a minority shareholding and without the right to do anything or push for any change now other than filing the form late.

The problem with the 13g form that elon filed to the sec the day before they offered him. The director position is that you can only file that form if you self-classify, as a passive investor and according to the sec. The term passive investor refers to someone who earns more than five percent of the company's shares, but can certify that the shares are not owned. With the intent on changing or influencing the control of the company - and you can take a quick look at elon's tweets about twitter policies and the future direction to see that elon very much isn't buying twitter shares as a casual, passive investor.

So immediately after literally minutes. After twitter tried to make elon take a passive seat on their board, elon went and filed an amendment to the 13g with the sec. Apparently, his traders made a little mistake that he actually only bought 9.1 percent of twitter shares, not the 9.2 percent that was originally claimed. Just a small mistake in adding up the numbers.

Maybe the batteries in the calculator run out or something like that, and they just happened to realize this mistake check this. A few minutes after twitter tried to suppress elon's entry into the company. The beauty of this new form and the amendment is that, unlike the previous form, this amendment means that elon is now classified as an active investor active meaning that he might want to go and directly influence. What twitter does nice move completely? Blindsided the twitter board that were left holding their private parts in their hands, but here is what it really means.

Elon is not happy with a 14.9 max ownership rule or having to take a backseat, and he never was. The beauty is that he knew. This is what the twitter management would try to do so because he knew it. He played the ballsy move and gave them a giant slap in the face.

Now there are three options for elon from here. He goes and buys up enough shares to control a 50 stake in twitter and do what he wants with getting rid of parag and the rest of the board, who seem to be not up for it option number two: is he acquires enough shares to enact a Vote to get rid of the board with the support of rita and some institutional investors, whatever that number may be or number three, he gets to keep his 9.1 shares as a passive investment. You know for old age for fun and giggles. Now you and me both know that elon isn't doing number three and i'm presuming that he's not going to go and give up and just sell his 9.1 percent and say: look it just didn't work out.

It is pretty clear. The guy wants to change twitter for the better and he has shown his hand and he is going to complete on that. So the question is how and when does he go and buy more shares? He can't really go in cahoots with any other major investors, because there are no individual investors that own any significant chunk of twitter. Even jack dorsey owns a tiny fraction of what elon owns so collusion or praying that the rest of the investors community support him might be somewhat of a risky play, but then again, twitter's average traded volume recently has been 19 million shares a day and before elon's Involvement, it was sitting a bit lower at around 17 million shares a day, so about 2 ish of the total shares outstanding and typically you can only buy a fraction of that daily volume without sending the price through the roof, the higher total, the less other shareholders There are around to provide liquidity for that trading volume.

So if elon goes in a massive buying spree, either the volume will drop or the share price will go up or both will happen now if the price does go up, that will also trigger the volume to then increase, as traders and some investors turn up to Collect their winnings, but realistically, if elon wants to go and buy 50 plus one share without skyrocketing the share price and, for example, going by a sixth of the daily trading volume, it will take him around four months to do it. If he's a bit more aggressive, perhaps he could do it a little bit quicker, especially if the share price jumps and causes the volume to increase. So if elon is going to play that chess move, it might take a little bit of time. I don't know if he can save himself some of that time by finding some large shareholders, maybe some of the existing board members who will go in with them and cut the total that he needs to collect down.

That's definitely possible and he can always go and collect the rest of what he needs afterwards. Now parak clearly implied without saying it that he has issues with elon joining the board by that reference to doing a reference check that was completely out of place. It's not like parag didn't know at the time what elon is like before offering him the board seat. He clearly already knew about his runnings with the sec and everything else.

It's all public and elon just happens to have a good enough background check to let you know nasa offer him exclusive contracts to fly us astronauts to the space station to offer him the next moon mission on behalf of the united states and the authorities to allow Him to launch more satellites into space than the sum of all other satellites ever launched. I am going to take a stab in the dark here and guess that twitter's background checks are not somehow much more comprehensive and rigorous than that of nasa and the us government. So, unfortunately, for the inexperienced, parag agrowell, he is now officially a sitting lame duck. I am guessing.

Elon has already started acquiring more shares by the time we are talking about it. In fact, he probably never stopped after finding that last disclosure and the moment that he has enough votes, elon is going to fire parag and the other executives of twitter for being completely incompetent and starting a fight. They had absolutely no chance of winning. Elon clearly sees twitter as having a unique vast opportunity, and i agree with him.

The concept of the business is insane. It has the capability of becoming the place where news is discovered and shared, taking a giant chunk out of all forms of traditional media and if elon can go and make free speech a firm core underpinning of the platform to enable free discourse. Regardless of whether you are right-leaning left-leaning or whatever leaning, that mission will be possible and i don't need to explain to you the commercial potential of a new media opinion, criticism and public discourse conglomerate that takes market share from all the big media companies in the world. I don't need to tell you what that might mean for twitter's future.

The amazing thing here is that, like tesla and like spacex, twitter offers elon a unique mix of an equally epic commercial opportunity and a public benefit opportunity in one need package, and that, i think, is why he's particularly interested. So now it's time to go and buy some popcorn and watch elon swallow twitter up, while the twitter temporary management flaps around waving their hands in the air is going to be fun. If you found this video useful, please don't forget to smash the like button for the youtube algorithm. Thank you.

So much for watching and i'll see you guys later. You.