Avid tweeter Elon Musk is Twitter’s biggest stakeholder at nearly 10%

Tesla boss Elon Musk has revealed a 9.2% stake in Twitter, worth nearly $3bn, making him the microblogging site’s largest shareholder and triggering a more than 25% rise in the company’s shares.

Twitter shares, which fell 38% in the 12 months to Friday’s close, were trading 26.4% higher at $49.70 early in New York.

Musk’s move comes close on the heels of his tweet that he was giving a “serious thought” to building a new social media platform, while questioning Twitter’s commitment to free speech.

A prolific Twitter user, Musk has more than 80-million followers and since joining the platform in 2009 has used it to make several announcements, including teasing a go-private deal for Tesla that landed him in regulatory crosshairs.

Of late, however, the world’s richest person has been critical of the social media platform and its policies. He recently ran a Twitter poll asking users if they believe the platform adheres to the principle of free speech, to which over 70% voted “no”.

Twitter’s recent quarterly results and lower-than-expected user additions have raised questions about its growth prospects, even as it pursues big projects such as audio chat rooms and newsletters to end long-running stagnation.

“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,” said Thomas Hayes, managing member at Great Hill Capital.

Musk — who, according to Forbes, has a net worth of about $300bn — has been selling down his stake in Tesla since November, when he said he would offload 10% of his holding in the electric car maker. He has sold $16.4bn worth of shares since then.

A regulatory filing on Monday shows that Musk owns 73.5-million Twitter shares, which are held by the Elon Musk Revocable Trust, of which he is the sole trustee. Financial services company Vanguard is Twitter’s second-biggest shareholder, with an 8.79% stake, according to Refinitiv data.

“Musk’s actual investment is a very small percentage of his wealth and an all-out buyout should not be ruled out,” CFRA Research analyst Angelo Zino wrote in a client note.

Musk has previously made early-stage investments in companies, including online payment processor Stripe and artificial intelligence firm Vicarious, but his latest investment is the first of its kind. He is also the founder and CEO of SpaceX, and leads brain-chip start-up NeuraLink and infrastructure firm The Boring Company.

Twitter was the target of activist investor Elliott Management in 2020, when the hedge fund argued its then boss and co-founder, Jack Dorsey, was paying too little attention to Twitter while also running Square.

Dorsey, who owns a more than 2% stake in Twitter, stepped down as CEO and chair in November 2021, handing over the reins to company veteran Parag Agrawal. Agrawal reportedly went on paternal leave for a few weeks in February.

Meanwhile, Musk and Dorsey have found common ground in dismissing the so-called Web3, a vague term for a utopian version of the internet that is decentralised.

Twitter did not respond to a Reuters request for comment.

Update: April 4 2022
This story has been updated with additional information.

Reuters