Tesla’s Elon Musk has set a fire under tech stocks with his disclosure that he owns more than 9% of Twitter.
Monday’s regulatory filing potentially makes him the biggest stakeholder in the company which has had something of a chequered past with the Tesla CEO and founder.
Musk owns 73.5 million Twitter shares (a 9.2% holding) 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.
Twitter shares soared more than 27% to close at $US49.97 after the filing, which comes close on the heels of Musk tweeting that he was giving “serious thought” to building a new social media platform.
Shares of other social media firms, including Meta Platforms and Snapchat owner Snap Inc, also rose.
Met shares added 4%, Snap shares were up more than 5%, Netflix shares woke up and jumped 4.8%, even Apple shares rose 2.3%, Alphabet shares rose 2% and Amazon shares rose almost 3%.
Musk is a prolific user of Twitter and has over 80 million followers on the site since joining in 2009.
He has used the platform to make several announcements, including teasing a go-private deal for Tesla that landed him in regulatory scrutiny in 2018. That cost him $US20 million in fines but when you are worth more than $US267 billion, that is chump change.
Possibly because of his run-ins, Musk has been critical of Twitter and its policies of late (it has been suspending users such as Donald Trump over abusive and threatening comments as well as fake news) and has said the company is undermining democracy by failing to adhere to free speech principles.
Musk is also the founder and CEO of SpaceX, and leads brain-chip startup Neuralink and infrastructure firm The Boring Company.
How much money did Musk make off the news? While his disclosure came out on Monday, but the document detailing the stake, worth about $US3 billion at Friday’s closing price, was dated March 14.
Twitter’s shares are up about 50% since then. So his stake after the 27% surge on Monday is now worth close to $US4 billion and he has probably made well over $US1.5 billion in profit.
But the time between the final purchase and the announcement breached SEC rules (as Musk often does). Because the stake is passive, SEC rules say it has to be revealed within 10 days of the final buy, not the 20 that Musk took.
On March 25, the day after the 10-day period ended, Musk posted a poll on Twitter, with the following preamble: “Free speech is essential to a functioning democracy. Do you believe Twitter rigorously adheres to this principle?”
Musk had already acquired the stake but had broken SEC rules in not disclosing it the day before – and made a big to-do about principles and free speech.
Tesla shares rose 5.6% on Monday (in sympathy?) off the back of rises for other techs.
