A week after warning that he would shake up the social media sector, Elon Musk bought a 9.2% stake in Twitter Inc. to become the platform’s largest shareholder.
After Musk’s acquisition was revealed in a regulatory filing on Monday, Twitter shares jumped as high as 27%.
The increase was the stock’s largest intraday gain since its first day of trading following its initial public offering in 2013.
Based on Friday’s market closing, the share is worth around $2.89 billion.
Musk, 50, surveyed his more than 80 million Twitter followers last month, asking if the firm adhered to free speech values.
The consequences of this poll will be important. Please vote carefully.
— Elon Musk (@elonmusk) March 25, 2022
He inquired if a new platform was required after more than 70% responded no, and said he was seriously considering forming his own.
According to Tom Forte, an analyst at DA Davidson & Co, “given Elon’s prior comments about wanting to start a social media company, I would say it’s possible that he will increase his stake in Twitter or take a controlling interest in the company sometime soon.”
Elon Musk is one of the most well-known Twitter users, and he has a history of getting into controversy on the network.
Tesla Inc. CEO Elon Musk is attempting to get out of a 2018 agreement with the Securities and Exchange Commission (SEC) that imposed restrictions on his tweeting about the electric vehicle company.
The call will be yet another huge test for new Twitter CEO Parag Agrawal, who took over after Jack Dorsey abruptly stepped down in November.
Agrawal pledged to enhance product execution, boost accountability, and make rapid decisions.
By the end of 2023, the firm established aggressive growth objectives, such as raising annual revenue to $7.5 billion and reaching 315 million daily users.
After Twitter revealed that Agrawal will succeed Dorsey as CEO in December, Musk uploaded a cryptic meme.
It showed Agrawal in the role of Soviet dictator Joseph Stalin and Dorsey in the role of Soviet secret police chief Nikolai Yezhov being pushed into water.
In a research note, Wedbush analyst Dan Ives said, “It looks like Elon has his eyes laser set on Twitter,” adding that the investment might lead to a “more aggressive ownership role.”
Because, unlike Google, Facebook, Amazon, and Snap, Twitter’s founders do not have unique voting influence over the firm’s destiny, the company is particularly vulnerable to outside pressure.
The firm has just recently recovered from activist pressure from Elliot Management, which began in 2020 and prompted Dorsey, who was serving his second term as Twitter’s CEO, to establish a succession plan.
Musk’s plans for his stake are unknown.
The incident that triggered the disclosure happened on March 14, according to the SEC filing.
The sort of form used frequently suggests that the investor isn’t looking to gain control of the firm or influence who controls it.
Based on the rise in Twitter’s shares in early trading Monday, Musk, who is already the world’s richest person, has profited approximately $1.1 billion on his investment since mid-March, according to the Bloomberg Billionaires Index.
Twitter is being pushed to create new things more quickly. To persuade wary investors that it was serious about developing its business, the corporation established lofty revenue and user growth targets.
Though Twitter’s stock has risen gradually over the years, it has trailed behind its sector counterparts.
Musk has chastised Twitter for its recent creation of profile images connected to non-fungible tokens, claiming that the social media platform is focusing on the wrong things.