Elon Musk accumulates 9.2% stake in Twitter

Tesla Inc. CEO Elon Musk has built a 9.2 percent stake in Twitter Inc., a regulatory filing showed on Monday, sending the micro-blogging site's shares soaring 28 percent in midday trading, ending the day up 27.02 percent.

In late March the silicon valley billionaire said he was giving "serious thought" to building a new social media platform.

Musk was responding to a Twitter user's question on whether he would consider building a social media platform consisting of an open source algorithm and one that would prioritize free speech and where propaganda was minimal.

Musk owns 73.5 million Twitter shares, valuing his passive stake in the company at up to $2.9 billion based on the stock's Friday close. The shares are held by the Elon Musk Revocable Trust.

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

Musk, however, has been critical of the social media platform and its policies of late and has said the company is undermining democracy by failing to adhere to free speech principles.

Meanwhile, Musk and Twitter's billionaire co-founder, Jack Dorsey, have had some common ground in terms of dismissing the so-called Web3, a vague term for a utopian version of the internet that is decentralized. Musk is also the founder and CEO of SpaceX, and leads brain-chip startup Neuralink and infrastructure firm The Boring Company.

Twitter vulnerable

Twitter is particularly vulnerable to outside pressure because unlike Google, Facebook, Amazon and Snap, the company’s founders don’t have special voting control over its future. The company has just recovered from activist pressure by Elliot Management that started in 2020 which led Dorsey, who was serving his second stint as CEO of Twitter, to set a succession plan.

It’s unclear what Musk is planning with his stake. The filing with the SEC shows that the date of the event that triggered the disclosure was March 14. The type of form used often indicates the investor isn’t seeking to acquire control of a company, or to influence who controls it.

Musk, already the world’s richest person according to the Bloomberg Billionaires Index, has made about $1.1 billion on his holding since mid March, based on the pop in Twitter’s shares in early trading Monday.

Twitter is under pressure to move faster in building new products. The company has set ambitious revenue and user growth goals to convince skeptical investors that it was serious about expanding its business. While Twitter has grown steadily for years, its stock gains have lagged behind industry peers.

Musk has lambasted Twitter’s recent development of profile pictures linked to non-fungible tokens, saying the social media company has the wrong priorities.

Reuters and Bloomberg contributed to this report.