Elon Musk, the billionaire CEO of Tesla and the world’s richest person, last weekend bought a nearly 10 percent stake in Twitter, the social media platform where he has more than 80 million followers and shares everything from business ideas and memes to his experience in a famous Berlin nightclub.
The purchase, made public Monday in a regulatory filing with the Securities and Exchange Commission, is valued at approximately $2.89 billion based on Friday’s closing price of Twitter’s stock. The news about the buy-in of Mr. Musk sent stock prices on Twitter soaring.
A Twitter spokesperson did not immediately respond to messages asking for comment. Mr. Musk also did not respond to a request for comment.
With the purchase, equal to 9.2 percent of the company, Mr. Musk looks set to become Twitter’s largest shareholder. Its stake is slightly larger than Vanguard’s 8.8 percent at the end of last year, and it dwarfs the 2.3 percent stake of Jack Dorsey, the former CEO of Twitter. The shares represent a fraction of Mr. Musk’s reported assets of more than $270 billion.
Mr. Musk has criticized the company in recent weeks for not adhering to free speech principles, and has openly considered starting its own social network that would be open source. His long and complicated personal relationship with the platform has also gotten him into trouble, with his tweets about Tesla’s finances resulting in legal battles with the SEC.
Some of Mr. Musk’s ideas, such as moving Twitter to an open source network, have gained the support of Twitter co-founder Mr. Dorsey, who stepped down as chief executive late last year.
“The choice of which algorithm to use (or not) should be open to everyone,” Mr. Dorsey said last month in response to a tweet from Mr. Musk advocating an open-source algorithm for the platform. Mr. Dorsey, who is friends with Mr. Musk, is expected to leave the Twitter board in May.
It’s unclear what Mr. Musk’s plans are beyond the position of major shareholders and whether he will ask — or be invited — to join Twitter’s board. Mr. Musk has filed a securities document showing that he intended to make the investment passive, meaning that he does not intend to pursue control of the company. But there was also speculation Monday that he could change the status of his investment, continue to buy stock or even attempt to take over the company entirely, today’s DealBook newsletter reported.
Daniel Ives, analyst at Wedbush Securities, said on Monday: “We expect this passive stake is just the start of broader discussions with Twitter’s board/management that could eventually lead to an active stake and potentially more aggressive ownership role from Twitter this morning.
If Mr. Musk is pushing for change on Twitter, he wouldn’t be the first excited investor the company has dealt with in recent years. Activist firm Elliott Management took a position on Twitter, calling for Mr. Dorsey’s removal in 2020. It later struck a deal with Twitter that included a $1 billion investment from private equity firm Silver Lake and took on new board members, including Silver Lake’s co-CEO Egon Durban. Silver Lake worked with Mr. Musk in his attempts to take Tesla private
Musk’s list of other business ventures is long: In addition to Tesla, he is chief executive of the rocket company SpaceX and founder of The Boring Company, a tunnel-building services company. Adding another role to the list could annoy Tesla shareholders. In the last two months of last year, Mr. Musk sold about $16 billion worth of Tesla stock, equivalent to about 10 percent of his stake in the electric vehicle company.
Tesla has defied the supply chain issues that have weighed down most traditional automakers, contributing to Mr Musk’s wealth and influence in the technology and auto industries. Tesla nearly doubled sales last year, approaching one million vehicles sold. On Saturday, Tesla said it sold 310,000 cars in the first three months of 2022, a 70 percent increase from the same period a year earlier — gains that contrast with the steep declines reported last week by General Motors and Toyota Motor. .
Tesla’s steadily expanding manufacturing network, including new plants in Austin, Texas and near Berlin, positions the company against automakers such as BMW and Mercedes-Benz in terms of vehicle sales. Despite a slew of new battery-powered models from Ford Motor, Kia and others, Tesla continues to dominate the electric car market, the industry’s fastest growing segment.
Still, executives who have interspersed media projects with other private endeavors have sometimes fallen into the crosshairs of policymakers. For example, former President Donald J. Trump had a vague view of Amazon because he disagreed with the coverage in The Washington Post, which Jeff Bezos bought in 2013. Tesla is a major beneficiary of environmental credit, while SpaceX pursues government contracts.
Regardless of the potential backlash, Mr. Musk can benefit from the investment. The document detailing Mr Musk’s stake said it was worth about $3 billion at Friday’s closing price. Dated March 14, Twitter’s stock has jumped about 50 percent since then.
Jack Ewing and Peter Eavis reporting contributed.
