Elon Musk has been making moves with Twitter (NYSE:TWTR). As a result of the whole saga, Dogecoin (DOGE-USD) might get accepted as a form of payment on Twitter.
Last week, news emerged that Musk owns 9.2% of the stock. The Tesla (NASDAQ:TSLA) and SpaceX chief executive officer was offered a position on the board of directors. But the board told him he could only buy up to 14.9% of Twitter. That might not have gone down so well with Musk, as well as their requirement that he undergo a background check and act in the interests of all other shareholders. Then on Friday, Apr. 8, both Musk and the board agreed that he would not join the board.
However, one change that Musk suggested was that Twitter should accept Dogecoin cryptocurrency as a form of payment. He made this recommendation in a series of tweets right after his stake was exposed.
This was probably one of the more practical recommendations he made. For example, another one was that the company should not depend on advertising revenue. The problem with that is Twitter depends on ads for almost 90% of its revenue. So, that is not going to happen.
Twitter May Have to Accept Dogecoin
There is no indication yet whether Twitter will accept Dogecoin. But the social media company may have to listen to Musk. For one, since he did not join the board, he is no longer limited to only owning up to 14.9% of the company. Theoretically, he could take his stake up to 19.9% of Twitter. After that, he could propose to buy a controlling stake.
This means that Twitter may have to listen to Musk. He has the wherewithal to put a huge amount of pressure on the company from the outside. Here is one reason why: Typically, most shareholders do not vote. They leave their votes up to others, like brokerage firms. Musk could propose that Twitter accept Dogecoin in a formal way at a shareholder meeting or a special meeting. There would be a high likelihood the proposal would pass.
Forbes magazine reports that Dogecoin could rise as a result of Musk’s support for it as a form of payment over Bitcoin (BTC-USD) and Ethereum (ETH-USD). However, since the end of March, Dogecoin has spiked from 13.31 cents to a peak of 17.29 cents on Apr. 5, when the Musk comments were made. As of Apr. 11, it was back down to 13.55 cents — more or less a wash.
On the date of publication, Mark Hake did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
