Elon Musk took a 9.2 percent share within Twitter Inc. to become the largest shareholder, just one week after suggesting he would change the face of the social media industry.
- Tesla CEO has frequently been asked questions about Silicon Valley giants
- Twitter shares recorded the most significant intraday gain since its IPO in 2013.
Twitter shares surged as much as 27% after Musk’s purchase was revealed Monday in a regulatory file. The increase was the most significant in price since the start of trading after the firm’s initial public offerings. This stake was valued at around $2.89 billion according to Friday’s market closing.
Musk 50 polled his more than 80 million followers on Twitter in March and asked them if the company respects the principles regarding free speech. When more than 70% of respondents said no, Musk was asked whether it was necessary to create a new platform and stated that he was giving an earful about launching his own.
“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,” said Tom Forte, an analyst at DA Davidson & Co.
Musk has been one of the most celebrities for a while on Twitter and has frequently been in trouble with the social media platform. Musk, the Tesla Inc. chief executive officer, is trying to get out of a 2018 agreement that he signed with the U.S. Securities and Exchange Commission which put restrictions in place for his tweets about the electric car maker.
The announcement is another test for the newly appointed Twitter Chief Executive Officer Parag Agrawal. He replaced Jack Dorsey after he unexpectedly quit in November. Agrawal promised to improve accountability, speed up decisions and improve the quality of product execution. The company has set ambitious goals for growth that include growing revenue annually to $7.5 billion and achieving three15 million users per day by 2023.
In December, Musk posted a bizarre meme shortly after Twitter revealed that Agrawal replaced Dorsey as Twitter’s CEO. The meme featured Agrawal portraying Soviet ruler Joseph Stalin and Dorsey as Soviet secret police chief Nikolai Yezhov being shoved into the water.
“It looks like Elon has his eyes laser set on Twitter,” stated Wedbush analyst Dan Ives in a research note, stating that this stake may result in a “more aggressive ownership role.”
Twitter is especially vulnerable to external pressure since, in contrast to Google, Facebook, Amazon, and Snap, its founders do not have a special vote over the company’s future. Twitter has recently recovered from pressure from activists led by Elliot Management, which began in 2020. It resulted in Dorsey, who was on his second term as the CEO of Twitter to create the course for succession.
It’s not known what Musk is thinking of doing regarding his stake. The disclosure with the SEC confirms that the data which triggered the disclosure was the 14th of March. The form typically indicates that the investor doesn’t intend to take control of the company or control who is in charge of the business.
Musk, who is the richest man in the world as per the Bloomberg Billionaires Index, has achieved around $1.1 billion from his stake since mid-March, Based on the volume in Twitter’s shares at the start of trading on Monday.
Twitter has been pressured to speed up on building the next generation of products. Twitter has set lofty goals for growth in revenue and users to convince investors who are skeptical that they are determined to expand its operations. Although Twitter has seen steady growth over many years, its gains in stock have been lagging behind those of its competitors.
Musk has criticized Twitter’s recent decision to create profiles that have been tied to tokens that are not fungible, declaring that the social media giant has the wrong goals.