Elon Musk buys 9.2% of Twitter and becomes the San Francisco company’s largest shareholder

Elon Musk with Model Y
Tesla founder Elon Musk at a 2020 Model Y presentation. REUTERS/Aly Song

Tesla boss Elon Musk has revealed a 9.2% stake in Twitterworth nearly $3 billion, making him the largest shareholder in the microblogging site and triggering a more than 25% rise in the company’s stock.

Musk’s move follows his tweet that he was seriously considering creating a new social media platform, while questioning the San Francisco-based company’s commitment to freedom of speech. expression.

A prolific Twitter user, Musk has more than 80 million followers since joining the site in 2009 and has used the platform to make several announcements, including teasing a privatization deal for Tesla that landed him in the regulatory collimator.

Lately, however, the world’s richest person has been critical of the social media platform and its policies, and recently conducted a Twitter poll asking users if they think the platform adheres to the principle of freedom. of expression, to which more than 70% voted “no”. ”.

Twitter’s recent quarterly results and lower-than-expected user additions have raised questions about its growth prospects, even as it pursues big plans like audio chat rooms and newsletters to end a stagnation for a long time.

“It sends a message to Twitter…having a meaningful stake in the business will keep them on their toes because that passive stake could very quickly turn into an active stake,” said Thomas Hayes, managing member of Great Hill Capital.

Musk – who Forbes says has a net worth of around $300 billion – has been selling his stake in Tesla since November, when he said he would offload 10% of his stake in the electric car maker . He has already sold $16.4 billion worth of stock since then.

A regulatory filing released on Monday showed Musk owns 73.5 million Twitter shares, which are held by Elon Musk Revocable Trust, of which he is the sole trustee. Vanguard is Twitter’s second largest shareholder, with an 8.79% stake, according to Refinitiv data.

“Musk’s actual investment represents a very small percentage of his wealth and a full buyout should not be ruled out,” CFRA Research analyst Angelo Zino wrote in a client note.

Musk has already made early investments in companies including online payment processor Stripe and artificial intelligence firm Vicarious, but his latest investment would be the first of its kind.

He is also the founder and CEO of SpaceXand runs brain chip startup Neuralink and infrastructure company The Boring Company.

Twitter was the target of activist investor Elliott Management in 2020, when the hedge fund argued that its then-boss and co-founder Jack Dorsey paid too little attention to Twitter while running Square.

Dorsey, who has a more than 2% stake in Twitter, resigned as CEO and chairman in November last year, handing over the reins to company veteran Parag Agrawal.

Agrawal reportedly took paternal leave for a few weeks in February.

Meanwhile, Musk and Dorsey have found common ground in rejecting so-called Web3, a loose term for a utopian version of the decentralized internet.

Twitter shares, which had fallen 38% in the past 12 months through Friday’s close, were trading at $47.19. The company added up to $8.38 billion to its market capitalization, which now stands at $39.3 billion.

Twitter did not respond to a request for comment from Reuters.

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