- Stake valued at approximately $3 billion
- Twitter shares soar 20%
April 4 – Elon Musk, top CEO of Tesla Inc (TSLA.O), announced a 9.2% stake in Twitter Inc (TWTR.N) worth nearly $3 billion, which making him the microblogging site’s largest shareholder and triggering a more than 25% surge in the company’s shares.
Musk’s move follows his tweet that he is seriously considering building a new social media platform while questioning Twitter’s commitment to free speech.
A prolific Twitter user, Musk has over 80 million followers since joining the site in 2009 and has used the platform to make several announcements, including alluding to a go-private deal for Tesla that landed him in the… regulatory crosshairs.
Lately, however, the richest person in the world has criticized the social media platform and its policies, and recently conducted a Twitter poll asking users if they believe the platform upholds the principle of free speech, for that over 70% voted “No”. Read more
Twitter’s recent quarterly results and lower-than-expected user additions have raised questions about its growth prospects, even as it pursues big projects like audio chat rooms and newsletters to end prolonged stagnation.
“It’s sending a message to Twitter…a significant stake in the company will keep them on their toes because that passive stake could turn into an active stake very quickly,” said Thomas Hayes, managing director at Great Hill Capital LLC.
Musk — who has a net worth of about $300 billion, according to Forbes — has sold his stake in Tesla since November, when he announced he was divesting 10% of his stake in the electric-car maker. Since then he has already sold shares worth $16.4 billion.
A regulatory filing Monday showed Musk owns 73.5 million Twitter shares held by the 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.
Tesla CEO Elon Musk speaks during a conversation with legendary games designer Todd Howard (not pictured) at the E3 gaming convention in Los Angeles, California, U.S. June 13, 2019. REUTERS/Mike Blake
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“Musk’s actual investment is a very small percentage of his assets, and a full buyout should not be ruled out,” wrote Angelo Zino, an analyst at CFRA Research, in a note to clients.
Musk has invested in early-stage companies including online payments processor Stripe Inc and artificial intelligence company Vicarious, but his latest investment would be the first of its kind.
He is also the founder and chief executive officer of SpaceX and runs brain chip startup Neuralink and infrastructure company The Boring Company.
Twitter was the target of activist investor Elliott Management Corp in 2020, when the hedge fund argued that its then-boss and co-founder, Jack Dorsey, was paying too little attention to Twitter while running Square.
Dorsey, who owns more than a 2% stake in Twitter, stepped down as CEO and chairman last November, handing over the reins to company veteran Parag Agrawal.
Agrawal reportedly went on maternity leave for a few weeks in February.
Meanwhile, Musk and Dorsey have found some common ground by rejecting the so-called Web3, a vague term for a utopian version of the internet that is decentralized. Continue reading
Twitter shares, which were down 38% over the 12 months to Friday’s close, traded at $47.19. The company increased its market cap by $8.38 billion, which now stands at $39.3 billion.
Twitter did not respond to a Reuters request for comment.
Reporting by Nivedita Balu, Eva Mathews, Akash Sriram and Praveen Paramasivam in Bengaluru; Edited by Anil D’Silva