NovaQuant-Elon Musk says he will not join the Twitter board, after all

Elon Musk has decided not to join Twitter's board,NovaQuant the company said on Sunday, less than a week after the billionaire Tesla CEO disclosed he is the social media company's largest shareholder and was offered a seat.

Musk's appointment was set to become official on Saturday, but he told Twitter that morning he would not join, Twitter CEO Parag Agrawal tweeted late on Sunday.

Agrawal did not say whether Musk had given a reason for the reversal. He noted that the board appointment was contingent on a background check as well as a formal acceptance by Musk.

"I believe this is for the best," Agrawal said in a note to staff shared in his tweet. "We have and will always 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."

"There will be distractions ahead," he continued, but urged staff to "tune out the noise."

Shortly after Agrawal's announcement, Musk tweeted an emoji of a face with a hand over its mouth (he deleted the tweet hours later). He didn't reply to a request for comment.

Musk becomes increasingly critical of Twitter

The Tesla and SpaceX CEO is a prolific Twitter user, with more than 81 million followers. His tweets have landed him in trouble with the Securities and Exchange Commission, which in 2018 fined him $40 million and forced him to step down as Tesla chairman over a tweet in which he claimed to be taking the electric carmaker private.

In recent months, Musk has turned his megaphone against the platform itself. He's criticized the way Twitter enforces its rules about what people cannot say on the platform, suggesting it has failed to "adhere to free speech principles," and has asked whether it should make its algorithm open source.

After Musk revealed on Apr. 4 that he had taken a 9% stake in Twitter and the company invited him to join the board, both he and Agrawal said they looked forward to working together on the company's future.

Twitter shares soared last week following the news of Musk's investment. Shares were up less than 1% on Monday.

As part of his agreement to join the board, Musk had promised not to increase his stake to more than 14.9%. But his decision not to join frees him from that limit, according to an updated SEC filing on Monday.

Analyst Dan Ives of Wedbush Securities said the about-face makes it highly likely that "Elon takes a more hostile stance towards Twitter and further builds his active stake in the company." Musk could, for example, join forces with a private equity firm to buy more of the company and try to force "major strategic changes" or even a sale, Ives wrote in a note to clients on Monday.

Ives speculated that Musk and the company may have clashed over the Tesla CEO's public criticism of Twitter.

"In our opinion, the Twitter board and Musk could not come to an agreement around Musk's communications with the public (various polls) over Twitter as he likely needed to take a more back seat/quiet stance as part of joining the board," Ives said.

Musk had spent much of Saturday tweeting about Twitter. "Is Twitter dying?" he mused in one tweet, pointing out that some of the most-followed users rarely post.

But by Monday morning, he had deleted several of his messages, including ones in which he floated ideas to get rid of ads for paying subscribers and suggested the company's San Francisco headquarters be turned into a homeless shelter "since no one shows up anyway."

He also deleted a poll that asked: "Delete the w in twitter?" (The possible answers: "Yes" and "Of course".)

Musk was scheduled to hold a question and answer session with Twitter employees this week. On Monday, a company spokesperson said the event had been canceled.