Musk backing off Twitter board opens door to hostile takeover

Elon Musk pauses and looks down as he speaks during a press conference at SpaceX’s Starbase facility near Boca Chica Village in South Texas on February 10, 2022.

According to analysts, Musk's reversal of his decision to join the company opens the door to a hostile takeover and could lead to more volatility in the stock.

Musk is no longer limited to owning 14.9% of the company because he didn't join the board. Many analysts think that Musk could consider a hostile takeover.

His weekend's changeup spared the company from having to deal with a director who is on the board. Don Bilson wrote in a note Monday that the situation would have been intolerable. As volatile as Musk is, we could see a move like that soon. We could never see everything. The overhang that TWTR now lives under qualifies as a distraction.

The statement announcing Musk would no longer join the board was pointed out by Bilson. In a phone interview with CNBC on Monday, Bilson said that the company's messaging was ominous.

Apoison pill or shareholder rights plan could be used to defend against a hostile takeover. It would be best for TWTR to keep that arrow in its quiver for the time being, because it might anger Musk and it comes with the risk of angering Musk.

It's going to be hard to get committed to an investment thesis because you never know where the winds are going to flow.

On Monday morning, Dan Ives offered a similar sentiment.

"This is clearly going to be an unfriendly situation, Andrew Ross Sorkin told CNBC."

I think it goes to the point that we will start to see if he agrees with certain board candidates in the coming days.

After Musk's stake in the company became public, the stock of the company had its best day since its IPO. After the company announced that Musk would join the board, the stock jumped 2%. The unpredictability of the shares could continue.

KeyBanc analysts wrote Monday that they expect Mr. Musk to get increased attention, which could cause share price volatility.

The majority of the drama is over, according to Gene Munster.

If he intended to do that, he would have made a better decision to go for the takeover immediately. He thinks taking over the social network isn't where Musk wants to spend his time.

I think he wants to move that forward because there is something important to him around free speech. He sees that as an opportunity as big as electrification and as big as space travel.

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Gene Munster says that Musk still wants to influence change.