Elon Musk's Newly Acquired Stake in Twitter is Even Bigger Than its Co-founder and Former CEO Jack Dorsey

author: FutureCar Staff    

Tesla Chief Executive Elon Musk made headlines once again after purchasing 73,486,938 shares of social media platform Twitter, equal to roughly a 9.2% stake in the company. Musk's major purchase of Twitter shares was revealed in a U.S. Securities and Exchange commission (SEC) filing on Monday.

It's unclear what Musk's intentions are for the investment, but the mercurial Chief Executive of the world's most valuable car company has complained recently that Twitter is censoring free speech.

The news of Musk's investment resulted in Twitter's stock price to jump by as much as 27% on Monday, representing Twitter's biggest intraday stock increase since its first day of trading following the company's high-profile IPO back in 2013.

Musk's stake in Twitter is now worth about $2.89 billion, based on Friday's market closing price. It dwarfs Twitter founder and former CEO Jack Dorsey's 2.25% stake in the company.

The announcement comes after Twitter founder Jack Dorsey announced he was stepping down as CEO in Nov 2021 and will be replaced by Parag Agrawal. The incoming CEO vowed to increase accountability on the platform, make decisions faster and to improve product execution. 

Twitter aims to increase its annual revenue to $7.5 billion and have 315 million daily users by the end of 2023.

Unlike tech giant's Facebook, Google and Amazon, Twitter is more vulnerable to outside pressure, since the company's founders don't have special voting control over its future. It means that Musk may have some influence over the company as the world richest person. Musk has a net worth of over $267 billion.

However, the SEC filing shows that the date of the event that triggered the disclosure was March 14, 2022. It generally means that the investor is not looking to acquire control of a company, or to influence who controls it.

Last month, Musk polled his 80+ million followers on Twitter, asking them for feedback on whether the social media company "adheres to the principles of free speech." After more than 70% of his followers said "no" to the question, he asked if a new social platform was needed. Musk hinted that he was giving serious thought to starting his own, which former President Trump is attempting with his floundering social media platform Truth Social.

Trump was famously booted from the Twitter platform following the Jan. 6, 2021 Capitol riot. The company said its decision was intended to reduce risk of further violence.

With 80 million followers on Twitter, Musk posts frequently on the platform, one of which sparked a SEC investigation in 2018.

Musk was the target of an SEC investigation as well as lawsuits from investors after tweeting about plans to take Tesla private at $420 a share in Aug 2018. He also wrote that funding to take Tesla private was "already secured".

Musk's tweet on Aug, 7, 2018 tanked the company's stock by nearly 20% that day, which led The SEC quickly opened an investigation and questioned Musk, Tesla's board and other executives. After speculation began to swirl around the truthfulness of Musk's claims, Tesla share price fell nearly 30% in the weeks afterward. 

The SEC investigation of Musk and Tesla was officially settled in Oct 2018 with a court approved fine of $40 million. Tesla paid $20 million and Musk was fined $20 million for the controversial tweet. In addition, Musk was required to step down as Chairman of Tesla, although he was allowed to remain in his role as Chief Executive.

Tesla, Musk and the SEC said in a joint filing that the penalties were in the best interest of Tesla investors. 

Tesla reported its 2022 Q1 deliveries last week. The electric car company delivered 310,048 vehicles in the quarter, a 68% jump from a year earlier. 

Tesla's stock is up 36.4% since the beginning of March. It reached $1143.60 on Monday, another 5% jump on the news of Musk's investment in Twitter.

FutureCar Staff