Beautiful Virgin Islands

Monday, May 23, 2022

Twitter shares take off as Elon Musk buys 9% stake worth almost $3bn

Twitter shares take off as Elon Musk buys 9% stake worth almost $3bn

Tesla founder Musk is yet to explain why he has built such a big holding in Twitter, particularly as he was recently critical of the platform's approach to free speech.

Shares in social media giant Twitter have surged by a quarter after it was revealed that Tesla billionaire Elon Musk had bought a 9.2% stake.

A regulatory filing showed the tycoon had snapped up 73,486,938 Twitter shares.

The stake is worth $2.89bn (£2.2bn), based on Twitter's closing price on Friday.

Musk is a frequent user of Twitter and has more than 80 million followers, but he has recently been critical of its approach to free speech and said he was giving "serious thought" to building a new social media platform.

Elon Musk is yet to explain his reasons for building a stake in Twitter but it is said to be a passive investment


His stake is considered a passive investment which signals he has no demands on a larger slice of the company.

But Wedbush analyst Dan Ives wrote in a note to investors: "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."

Thomas Hayes, managing member at Great Hill Capital LLC added: "It does send a message to Twitter... having a meaningful stake in the company will keep them on their toes, because that passive stake could very quickly become an active stake."

Musk's use of Twitter has got him into trouble in the past.

He is locked in a legal battle to free himself from the constraints of a deal he made with US regulators in 2018. The agreement forces him to have his tweets about Tesla pre-approved by a lawyer to avoid breaking rules around the disclosure of market sensitive information.

Musk signed an agreement with the US Securities and Exchange Commission (SEC) after he claimed, in a tweet, that he had secured funding to take the company private at $420 (£325) a share.

But the billionaire now argues that he was coerced into signing the agreement, officially known as a consent decree, due to "the SEC's unrelenting regulatory pressure", according to a court filing.

Musk expressed interest last month in building his own social media platform


His legal team has accused the body of trying to curtail Musk's right to free speech.

He was yet to comment on the reasons for taking the Twitter stake.

The platform's share price closed up just over 27% in Monday trading in the US.

Newsletter

Related Articles

Beautiful Virgin Islands
×