TwitterElon Musk said Tuesday that he is joining its board. One day earlier TeslaThe CEO of’and the richest man in the world, disclosed that he is the largest shareholder at the social media company.

Investors are not content with being the center of Silicon Valley’s latest drama. They want to understand what this all means.

Twitter stock rose 4% Tuesday after the announcement by its board. Twitter had its Monday stock exchange announcement. best daySince the company’s IPO, 2013, its stock price has risen more than 27%. Musk is a rare market believer.

“It’s nice when a company reports profits — it seems much better if a company reports its association with Elon Musk,” said Howard Fischer, a partner at the law firm Moses & Singer in New York and a former lawyer at the Securities and Exchange Commission. While he might not make operations more efficient, or increase revenue, and he certainly won’t lower the liabilities, the stock markets reward him. [Twitter].” 

One thing is certain, regardless of the impact on financial results. Musk appears to have gained greater control of a company he regularly criticizes and an online platform where he has over 80 million followers.

Musk’s intention with Twitter is not clear, which may be deliberate.

He has previously criticized Twitter’s content moderation policies and claimed that the company had failed to respect free speech principles. He also called for Twitter’s creation of an edit button, a complaint that is common in Twittersphere. This would allow Twitter users greater control over what tweets are displayed in their newsfeed. 

He will likely start slowly at first, then move to more freedom of speech, according to Youssef Saqali, an analyst with Truist Securities, who suggests buying Twitter shares. He doesn’t care about user growth or other issues. 

Parag Agrawal (Twitter CEO) and Co-Founder Jack DorseyBoth Musk and the board were both pleased to have him join them.

Agrawal said that Agrawal is both an avid believer and a fierce critic of the service. This is precisely what we need in Twitter and the boardroom to be stronger long-term,” Agrawal tweeted. “Welcome Elon!”

Musk declared his ownership in Twitter shares using a form 13G with the SEC. This means that it is a passive interest. This often indicates that the owner doesn’t intend to influence or control the company. 

This is just for the moment. Musk might choose to have an active interest in the company and take a stronger role. Musk will have to declare it to the SEC using a form 13D. If he does, he will need to explain his motives. 

Chairman of Great Hill Capital, Tom Hayes said that the stake could be activated at any moment. Twitter seems to be proactive in putting him on the Board before he asks for it.

Twitter has set parameters for Musk’s nomination to the board. This could potentially limit Musk’s influence. According to the filing, Musk cannot own more than 14.9% Twitter stock for the duration of his term on the board. This includes 90 days following. Musk will continue to serve as a Class II director through 2024.

“It seems they want to set that situation because they don’t want it.” [Musk]Hayes claimed that Hayes would have complete control over the company.

Twitter has a long history of activism investors. It will become a major player in 2020. struck a dealFollowing the push by Elliott Management to remove Dorsey from the role of CEO, Elliott Management was hired. Silver Lake made $1 billion in investment and Elliott was given seats on Twitter’s board. 

Wall Street analysts are already speculating on what Musk might have planned for Twitter, according to Wall Street analysts. More aggressive share purchases? Do you want more board members? A full buyout might be possible?

Don Bilson, a Gordon Haskett analyst wrote Monday that you can use your imagination. It remains to be seen “if Dorsey likes the idea that Musk buys Twitter as it is.” Jeff BezosThe Washington Post was purchased.

Hayes indicated that it was unlikely Musk would seek to do something dramatic such as a takeover or shakeup.

Hayes explained that Musk has “a material financial stake” in the company and added that Musk wouldn’t want to take control of the company as long Twitter “executes his ideas”.

Musk may still push for changes to the company’s policies. He polled Twitter users last month to find out if the company adhered “rigorously” to freedom of speech.

Musk wrote, “Given Twitter is the de facto central town square,” Musk tweeted. Musk tweeted, “What should I do?”

Musk has a shady definition of freedom speech. He’s known for attacking journalists and other critics of his company and himself. Musk has accused the Securities and Exchange Commission (SEC) of harassing him in an a calculated effort to “chill” his right to free speechIn its oversight of his communicationsFollowing a 2018 tweet suggesting that he had secured financing to take the company public, shareholders met him.

Squali explained that Musk must keep true to his free speech promise. Any drastic changes made to Twitter would make it more controversial. He said that controversy tends to draw consumers but repel advertisers. This is something Squali suggested the board should be aware of. 

Twitter claimed Musk and the other board members don’t have authority to establish company policies. 

CNBC spoke with a spokesperson for Twitter, who stated that “our policy decisions aren’t determined by shareholders or the board.”

According to the spokesperson, Twitter’s board is an integral part of providing feedback and guidance “across our entire service”, but daily operations and decisions are handled by Twitter executives and employees.  

The board is also uncertain about Musk’s presence. Musk, in addition to being the CEO of Tesla, is also the CEO at rocket company SpaceX, and Neuralink which aims to create implantable brain chips.

Fischer suggested that Twitter management should be wary of Musk drawing the attention of the SEC. He cited his publicized conflicts with the agency. Musk has a history of courting controversyWhile promoting his businesses on Twitter while ignoring some SEC regulations, he did so. 

Fischer said, “If he were Twitter I would be worried about him drawing attention to the SEC.”

CNBC reached Musk for comment but he did not respond immediately.

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