If you can’t beat ’em, buy a huge chunk of stock. That way, you can divide and conquer from within. Elon Musk now owns four times as many Twitter shares as the company’s founder, Jack Dorsey. It’s an invasion but not a planned hostile takeover, yet.
Elon Musk invades Twitter
Elon Musk just invaded the Twitter conference room by becoming “Twitter’s largest shareholder.” That will give him some real clout with the board of directors. Maybe now they’ll listen when he talks about their suppression of free speech.
He got what insiders call a bargain, snapping up “a 9.2 per cent stake in the social media company” for a mere $273 billion. That works out to nearly 73.5 million shares.
Paperwork filed with the Securities and Exchange Commission verifies that “the Tesla co-founder has more than quadruple the shares of Twitter’s founder Jack Dorsey, who owns 2.25 per cent.”
It may be a huge chunk of stock but the experts call Elon Musk’s purchase a “passive stake in the company.” By close of business on Friday his block was valued at $2.9 billion which means he picked up 500 million in profit already. At least, on paper.
All it took was Elon Musk’s name in the news stories to bump the price of Twitter stock “by more than 26 per cent in pre-market trade before Wall Street opened on Monday.” That means he’s now ahead around “$1.2 billion in three weeks.”
Profit isn’t the reason he did it. He intentionally wanted to be the company’s “largest shareholder.” He isn’t happy with the way it’s being run.
Start of a broader conversation
The SEC calls the stake Elon Musk cut out of Twitter a “passive investment.” All that means is that “he is a long-term investor that’s looking to minimize his buying and selling of the shares.” Insiders see this as only the beginning of a three-dimensional chess game.
According to Dan Ives of WedBush Securities, “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.”
Elon had enough displeasure with Twitter that he was kicking around starting his own platform. Looks like he decided not to reinvent the wheel, just buy a used one and repaint it. “Musk could try to take a more aggressive stance here on Twitter,” Ives notes.
“This eventually could lead to some sort of buyout.” That makes sense to experts “given what Musk has at least been talking about, at least from a social media perspective.”
Elon Musk has been vocal for quite a while, “raising questions about the ability to communicate freely on Twitter.” As recently as last month, he was complaining “about free speech and the social media platform.” He took an informal poll.
“Free speech is essential to a functioning democracy. Do you believe Twitter rigorously adheres to this principle?” Apparently the answers convinced him to buy into Twitter. Probably because “70 per cent of two million users” responded “that the platform does not adhere to free speech.“
