Elon Musk added to Twitter's board of directors: filing
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One day after disclosing a 9.2% passive stake in the company, Elon Musk has been added to Twitter's (NYSE:TWTR) board of directors, according to an 8-K filing from the company.
According to the filing, Musk will be a Class II director and his term will expire at the company's 2024 annual shareholder meeting.
The filing also added that as long as Musk is on the board of directors, his ownership stake will be capped at 14.9%.
Twitter (TWTR) shares gained more than 2% to $50.98 on Tuesday following the announcement.
Following the announcement, Musk tweeted that he was "looking forward to working with [Chief Executive] Parag [Agrawal] & Twitter board to make significant improvements to Twitter in coming months!"
Agrawal welcomed Musk to the board, tweeting that he is both a "passionate believer and intense critic," something the company needs.
According to a filing with the Securities and Exchange Commission, Musk started buying Twitter (TWTR) shares in January.
In a note to clients prior to Musk being added to the board of directors, Bank of America analyst Justin Post suggested Musk's involvement could result in changes to content policy.
Post, who rates Twitter shares "buy" with a $54 price target, noted that Twitter (TWTR) is "more vulnerable" to peer pressure than some other internet companies as it does not have special voting control.
"We see the news as positive for the stock as it opens up potential for Mr. Musk taking up a board seat and influencing vision and execution," Post wrote in a note to clients, adding that the stock could also see gains "due to potentially higher retail interest/activity."
Also prior to the announcement of Musk being added to the board, investment firm MKM downgraded Twitter to neutral from buy, leaving its estimate at $49, noting that the "near-term risk/reward is fairly balanced at current levels."
Last month, it was reported that Twitter's (TWTR) TweetDeck platform may become a subscriber-only platform.