The world’s richest man and Tesla’s boss, Elon Musk, just dropped a whopping $2.9 billion on Twitter (NYSE:TWTR) shares. According to documents filed with the US Securities Exchange Commission (SEC), this gives him a 9.2 percent stake in the social media giant, making him the largest individual shareholder.
This means that his stake in Twitter is more than 4x the shares held by founder Jack Dorsey whose current holding stands at about 2.25 percent. Unsurprisingly, shares surged by 26 percent, adding roughly $8 billion to the company’s valuation.
Dan Ives of WedBush Securities wrote in a client note early Monday, “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.”
Musk, who has over 80 million followers on the platform, has been raising concerns regarding the ability to communicate freely on Twitter in the recent past. Just last month, he tweeted a poll asking whether users of the platform believed that it adhered to principles of free speech and later sent out another tweet asking whether a new platform is needed.
Twitter has been in the crosshairs of both sides of the political divide. Some believe that the platform didn’t effectively deal with the spread of misinformation about covid-19 and alleged election fraud. Also, the ban of former US president Donald Trump’s account and censoring of some points of view has further contributed to Twitter’s perceived curtailing of free speech.
While the primary consensus is that this purchase could be the beginning of Musk’s strategy to instigate change at Twitter, Ives believes that it would be hard to do so alone. At the moment, Twitter has a $32 billion valuation. Though this pales in comparison to Musk’s personal fortune, which is more than $280 billion, most of his vast wealth is tied up in Tesla and SpaceX stock. Ives thinks we could see a partnership between Musk and maybe private equity if he is serious about driving real change on Twitter. In reality, this doesn’t seem far-fetched as this is not the first time Twitter has caught the attention of activist investors.
