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Twitter shares soar as Elon Musk takes $2.9bn stake

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·Finance Reporter, Yahoo Finance UK
·3-min read
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Elon Musk  twitter gestures as he speaks during a press conference at SpaceX's Starbase facility near Boca Chica Village in South Texas on February 10, 2022. - Billionaire entrepreneur Elon Musk delivered an eagerly-awaited update on SpaceX's Starship, a prototype rocket the company is developing for crewed interplanetary exploration. (Photo by JIM WATSON / AFP) (Photo by JIM WATSON/AFP via Getty Images)
Elon Musk has bought a large stake in Twitter. Photo: Jim Watson/AFP via Getty

Tesla (TSLA) and SpaceX CEO Elon Musk has purchased a 9.2% stake in Twitter (TWTR), worth almost $3bn (£2.29bn).

Twitter shares jumped by a fifth in early trading, with the stock up $8, or 20.3%, at $47.30, in early trading.

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According to a filing with the US Securities and Exchange Commission (SEC) Musk holds a 9.2% passive stake in micro-blogging site Twitter Inc as of 10 February 2022.

"Amount beneficially owned: 73,486,938 shares consisting of shares of Common Stock held by the Elon Musk Revocable T 2003 for which Eon Musk is the sole Trustee," the filing stated.

The SEC filing was signed by Musk and dated Monday.

The stake is worth $2.89bn, based on Twitter’s closing price on Friday.

Twitter shares jumped 20% in early trading. Chart: Yahoo Finance
Twitter shares jumped 20% in early trading. Chart: Yahoo Finance

Musk, although very active on Twitter, has criticised the platform in the past. In late March, the Tesla chief said he was giving "serious thought" to building a new social media platform.

He held a Twitter poll asking users if they believed Twitter adheres to the principle of free speech, to which over 70% voted “no”.

Musk then suggested that Twitter was undermining democracy by failing to adhere to free speech principles, adding “Is a new platform needed?”.

The stake makes Musk the largest shareholder in Twitter. His position is also more than four times larger than that of founder Jack Dorsey’s — which sits at 2.25% shares outstanding.

Musk’s 9.2% stake puts him ahead of investment group The Vanguard Group (with 8.79%), Morgan Stanley Investment Management (8.08%) and BlackRock Institutional Trust Company (4.56%).

Musk is one of Twitter’s most popular users, with more than 80 million followers.

"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," analysts Daniel Ives and John Katsingris of Wedbush said.

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Ben Laidler, global markets strategist at social investment network eToro, said Musk is diversifying his investments.

"This is a significant public step in diversifying his investments away from major holdings like Tesla (TSLA) and SpaceX. It has triggered a Twitter share price surge, and focused attention across the long-suffering social media sector, from Meta (FB) to Snap (SNAP).

“Warren Buffett famously encourages investments in ‘what you know’, and Elon Musk knows Twitter very well. He has 80 million followers on the platform, has made over 17,000 tweets since joining in 2009, and recently publicly criticised the company for its free speech policy.

“It remains to be seen what Musk plans for his stake, which is four times the size of founder Jack Dorsey. Twitter has only recently seen Dorsey step down as CEO in November last year, under pressure from famed activist investor Elliott Management.”

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