After weeks of cryptically hinting at a business expansion into social media, Elon Musk bought a 9.2 percent stake in the publicly-traded platform Twitter. Musk, the world’s richest man with an estimated $273 billion fortune, bought around 73 million shares of the social media company for about $2.4 billion. The stake was valued at $2.9 billion based upon Friday’s market close according to the Securities and Exchange Commission, as reported by Daily Mail.
At a glance
- World’s richest man Elon Musk bought a 9.2 percent stake in Twitter in March for over $2 billion
- Musk’s stake is a passive investment; meaning he will likely hold long term and use the equity to pursue a more active role in the company in the future, if so desired
- Musk has a checkered past on Twitter. He routinely stirs up varying degrees of controversy to his 80 million followers
Musk physically bought the shares in mid-March, but filings were just made public Monday during pre-market. News of Elon Musk’s trade prompted Twitter’s stock to soar by more than 26 percent before Wall Street opened Monday. Therefore, Musk’s shares have already appreciated in value by over $1 billion in just three weeks.
The massive buy triggered a rising tide effect in the market for all social media companies, including Meta Platforms (Facebook) and Snap, Inc. Musk’s stake in Twitter already rose considerably, but it is considered a passive investment; which means he is a long-term investor that’s looking to minimize his buying and selling of the shares.
“We would expect this passive stake as just the start of broader conversations with the Twitter board/management. It could ultimately lead to an active stake; and a potential more aggressive ownership role of Twitter,” Dan Ives of WedBush Securities wrote in a client note early Monday.
Passive investment indicates long-term interest in owning and potentially operating a company; rather than simply trying to time the market and make money on price movement. The SEC also implements many financial safeguards in order to prevent detrimental volatility during trades like Musk’s.
Elon Musk’s Twitter usage landed him in hot water with regulators before — the same regulators overseeing this stock buy
Ives also told CNBC: “Musk could try to take a more aggressive stance here on Twitter. This eventually could lead to some sort of buyout. This makes sense given what Musk has at least been talking about, at least from a social media perspective.”
The massive investment comes on the heels of Musk openly challenging Twitter’s free speech commitment — or lack thereof.
Musk’s open question was part of a response to a Twitter user’s question on whether he would consider building a social media platform consisting of an open-source algorithm. More specifically, would he consider building one that would prioritize free speech and dissuade propaganda?
Musk’s Twitter usage to his more than 80 million followers lands him in hot water occasionally, too. The SEC often tries to intervene when they deem Musk is using Twitter in order to manipulate stock prices by sharing sensitive information about his companies.
In a nod to his well-known interest in marijuana, Musk tweeted in 2018 that he was “considering taking Tesla private at $420. Funding secured.” Of course, no funding existed, and Musk called the tweet a joke; but financial regulators did find it funny.