The late-Sunday announcement capped a whirlwind week. Mr. Musk’s 9.2% stake in Twitter was made public last Monday, plans for him to join the board were announced Tuesday, and he spent much of the weekend tweeting criticisms, suggestions and apparent jokes about the company.
Mr. Agrawal said in a message posted to Twitter that he and the board were excited about collaborating with Mr. Musk, and believed that having him as a fiduciary of the company, where he “has to act in the best interests of the company and all our shareholders, was the best path forward.” Mr. Musk’s appointment was to take effect on Saturday, the Twitter CEO wrote, “but Elon shared that same morning that he will no longer be joining the board.”
Mr. Agrawal didn’t provide a reason for Mr. Musk’s decision. “I believe this is for the best,” he said. “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.”
The Tesla Inc. CEO didn’t respond to a request for comment late Sunday. He tweeted a “face with hand over mouth” emoji after Mr. Agrawal’s tweet.
Shares of Twitter fell 0.5% in recent premarket trading following the announcement, paring earlier declines of about 8% and pointing to possible losses for the stock when the market opens Monday in New York. That could undo some of the gains the company logged last week after the news of Mr. Musk’s stake. Last week, Twitter climbed 18%, marking its best weekly performance since February 2021 and one of its best weeks on record.
In recent premarket trading Monday, shares of Tesla pulled back 3.5%.
Mr. Musk, the world’s richest person, is known for his unpredictable behavior as well as his business acumen. His involvement in Twitter had already presented an unusual challenge as well as a possible opportunity for Mr. Agrawal, just months into his tenure as CEO, and the company said that it had asked him to join its board. Now, with Mr. Musk exercising his influence from the outside, the dynamics could be even more complicated.
“There will be distractions ahead, but our goals and priorities remain unchanged,” Mr. Agrawal wrote. “The decisions we make and how we execute is in our hands, no one else’s. Let’s tune out the noise, and stay focused on the work and what we’re building.”
Several Twitter employees posted their reactions to Mr. Agrawal’s announcement on Sunday, with some expressing exhaustion about the roller-coaster situation since Mr. Musk disclosed his stake in the company.
“The drama that keeps on giving,” one Twitter employee tweeted Sunday evening. Another simply tweeted a photo of the cartoon character SpongeBob SquarePants lying face flat on the floor.
Mr. Musk had tweeted about Twitter throughout the weekend. He asked his 81 million followers if they thought that Twitter was dying and pointed out that several top Twitter accounts, including those of artists Taylor Swift and Justin Bieber, rarely tweet.
Other tweets seemed less serious.
“Delete the w in twitter?” Mr. Musk asked his Twitter followers in a poll.
Most of the provocative tweets appeared to come after Mr. Musk decided not to join the board. His weekend string of tweets about Twitter started around 9:30 a.m. ET on Saturday.
In the weekend tweets, Mr. Musk said Twitter Blue should ban ads, lower its $2.99-a-month price and consider accepting dogecoin cryptocurrency as payment for the subscription service. He also said subscribers should get an authentication check mark.
It was unclear how serious Mr. Musk was about his suggestions. Although Mr. Musk is known for causing controversy on Twitter, it isn’t common for major shareholders who have been invited to a company’s board to call out the company so publicly.
A self-described “free speech absolutist,” Mr. Musk has frequently encouraged the platform to allow a range of opinions.
Mr. Musk has since deleted several of the tweets he posted over the weekend.
Mr. Musk’s tweets have gotten the billionaire into legal troubles in the past. In September 2018, Mr. Musk and Tesla entered into a settlement agreement with the Securities and Exchange Commission following a security-fraud charge brought by the SEC against him.
Since last year, Twitter has been working toward reaching publicly stated goals of 315 million daily users and $7.5 billion in annual revenue by the end of 2023. The company hit $5.08 billion in revenue at the end of last year, up 37% from the previous year, while its user base increased 13% to about 217 million daily users. If Twitter can maintain that pace through the end of 2023, it would exceed its revenue target but miss the mark for enlarging its user base.
Shares of Twitter have fallen more than 25% over the past six months, while the NYSE Composite Index has gained more than 1% over the same period.
Mr. Agrawal took over as Twitter chief executive from co-founder Jack Dorsey in November. Mr. Agrawal has been at the company for more than a decade, starting as a software engineer and serving as the company’s chief technology officer from 2017 until his promotion to the top role.
Shortly after taking over as CEO, Mr. Agrawal shuffled the company’s leadership and enacted a culture of moving quickly and decisively. Since his arrival, the company has pushed further into supporting blockchain and NFT technologies.
Twitter on Wednesday said it was developing a feature that would allow users to edit tweets after they are posted. The announcement came after Mr. Musk polled his followers asking if they wanted the edit feature.
—Caitlin McCabe contributed to this article.
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