Less than 10 days ago, Elon Musk — known to be a bit cheeky on Twitter — tweeted that he was giving “serious thought” to building a new social media platform that would rival, among other things, Twitter.
On Monday, Musk instead opted to become Twitter’s largest shareholder. The news was not made public with a cheeky tweet but rather a nondescript SEC filing, which revealed the Tesla CEO’s massive 9.2% stake. “Oh hi lol,” Musk later tweeted to his 80 million followers.
“Seize the Memes of Production!”
For a CEO, Elon Musk tweets a lot. While most public statements from chief executives are vetted as cautiously as papal decrees, Musk has used the social media site to challenge Vladimir Putin to a duel, hype up joke cryptocurrency Dogecoin, and get himself in trouble with the Securities and Exchange Commission for claiming he was considering taking Tesla private.
In fact, under an agreement with the SEC, Musk is supposed to have his tweets vetted by a lawyer, but the man loves tweeting so much that he is appealing. On Monday, Musk’s Musk’s posting finally became more than just passion. Markets, in a year where tech firms have so far disappointed, hit the like button:
- News of Musk’s stake, worth $2.9 billion based on Twitter’s Friday closing price, drove shares up 29% in early afternoon trading. That added more than $8 billion to Twitter’s $31 billion market cap and Musk himself made more than $700 million — roughly double Twitter’s net income over the past three years.
- As of Friday, Twitter shares had dropped about 8% in 2022, but Musk erased that and more in one session. At $50.70, Twitter’s share price is now up 18% this year.
Passive Aggressive: Twitter has aggressive plans to reach $7.5 billion in annual revenue by the end of 2023, up from $5 billion last year. Musk, who has questioned whether Twitter’s content moderation policies protect free speech, may soon play a role in dictating them. “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,” Dan Ives, an analyst at Wedbush Securities, wrote in an investor note.
Hit the Road, Jack: Musk’s stake in Twitter is over four times the 2.25% owned by Jack Dorsey, the company’s founder who stepped down as CEO in November to focus on running Square. Dorsey, for the record, is a fan of Musk’s tweets.