Musk becomes Twitter’s largest shareholder
Elon Musk, the billionaire CEO of Tesla and the world’s wealthiest person, bought a nearly 10% stake in Twitter, the social media platform on which he has more than 80 million followers and shares everything from business ideas and memes to, this past weekend, his experience at a famed Berlin nightclub.
The purchase, made public Monday in a regulatory filing with the Securities and Exchange Commission, is worth about $2.89 billion based on the closing price of Twitter’s stock Friday. News of Musk’s buy-in sent Twitter share prices soaring.
A spokesperson for Twitter did not immediately respond to messages requesting comment. Musk likewise did not respond to a request for comment.
The purchase, equal to 9.2% of the company, appears to make Musk Twitter’s largest shareholder. His holding is slightly larger than Vanguard’s 8.8% at the end of last year, and it dwarfs the 2.3% stake of Jack Dorsey, Twitter’s former CEO. The shares represent a fraction of Musk’s reported $270 billion-plus net worth.
Musk has criticized the company in recent weeks for failing in his view to adhere to free speech principles, and he has openly considered starting a social network of his own that would be open source. His long and complicated personal relationship with the platform has also gotten him in trouble, with his tweets about Tesla’s finances resulting in legal wranglings with the SEC.
Some of Musk’s ideas, like moving Twitter to an open-source network, have earned the support of Twitter’s co-founder, Dorsey, who stepped down as chief executive late last year.
“The choice of which algorithm to use (or not) should be open to everyone,” Dorsey said last month in response to a tweet from Musk advocating an open-source algorithm for the platform. Dorsey, who is friendly with Musk, is expected to leave the Twitter board in May.
It is unclear what Musk’s plans are beyond the large shareholder position and whether he will ask — or be invited — to join Twitter’s board. Musk filed a securities document indicating he planned for the investment to be passive, meaning he does not intend to pursue control of the company. But there was also speculation Monday that he could change the status of his investment, continue buying shares or even try to acquire the company outright, The New York Times’ Dealbook newsletter reported.
“We would expect this passive stake as just the start of broader conversations with the Twitter board/management that could ultimately lead to an active stake and a potential more aggressive ownership role of Twitter,” Daniel Ives, an analyst at Wedbush Securities, said Monday morning.
If Musk pushes for change at Twitter, he would not be the first agitated investor the company has had to contend with in recent years. Activist firm Elliott Management took a position in Twitter and called for Dorsey’s removal in 2020. It later struck a deal with Twitter that included a $1 billion investment from private equity firm Silver Lake and brought on new board members, including Silver Lake’s CO-CEO, Egon Durban. Silver Lake partnered with Musk in his efforts to take Tesla private.
Musk’s list of other business ventures runs long: Beyond Tesla, he is CEO of rocket company Spacex and founder of The Boring Co., a tunnel construction services company. Adding another role to the list could irk Tesla shareholders. In the last two months of last year, Musk sold around $16 billion of Tesla stock, equivalent to roughly 10% of his stake in the electric vehicle company.
Tesla has defied the supply-chain problems that have strained most traditional carmakers, adding to Musk’s wealth and his influence in the tech and auto industries. Tesla nearly doubled sales last year, approaching 1 million vehicles sold. On Saturday, Tesla said it sold 310,000 cars in the first three months of 2022, a 70% increase from the same period a year earlier — gains that contrast with steep declines reported last week by General Motors and Toyota Motor.
Tesla’s steadily expanding production network, including new factories in Austin, Texas, and near Berlin, positions the company to rival carmakers like BMW and Mercedes-benz in numbers of vehicles sold. Despite an array of new battery-powered models from Ford Motor, Kia and others, Tesla continues to dominate the market for electric cars, the industry’s fastest-growing segment.
Still, executives who have juggled media projects with other private endeavors have sometimes found themselves in policymakers’ crosshairs. Former President Donald Trump took a dim view of Amazon because he disagreed with coverage in The Washington Post, which Jeff Bezos bought in 2013. Tesla is a large beneficiary of environmental credits, while Spacex pursues government contracts.
Regardless of potential pushback, Musk may stand to gain from the investment. The document detailing Musk’s stake said it was worth about $3 billion at Friday’s closing price. It is dated March 14, and Twitter’s shares are up about 50% since then.