July 14, 2024

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Elon Musk has become the largest contributor to Twitter

When Elon Musk considered making Tesla private in 2018, he posted on Twitter to tell the world about it. When he got stuck in traffic in 2016, he chirp The idea of ​​creating an underground tunnel system to relieve “spirit-destroying” congestion. And when he challenged Russian President Vladimir Putin to a one-on-one fight last month, he said Broadcast it on Twitter.

Now Mr. Musk puts his money where he speaks.

Monday, a regulatory deposit The Securities and Exchange Commission revealed that Mr. Musk, the billionaire CEO of Tesla and SpaceX and the world’s richest person, has bought a 9.2 percent stake in Twitter, the social media platform where he has more than 80 million followers. The purchase appears to have made Musk’s largest shareholder Twitter, ahead of the 8.8 percent stake held by mutual fund company Vanguard, and dwarfing the 2.3 percent stake of Jack Dorsey, the former Twitter chief executive.

Mr. Musk’s Twitter investment, which he has accumulated since at least last month, was worth about $2.89 billion based on the company’s closing share price on Friday. But by the end of Monday, after news that he had bought Twitter stock sent Twitter’s stock price up more than 27 percent, it was worth about $3.7 billion. The shares are just a fraction of what Mr. Musk has reported, which is worth more than $270 billion net value.

Despite his penchant for sharing everything on Twitter — from business ideas, insults and memoirs to his experience at a popular Berlin nightclub last weekend — Mr. Musk was uncharacteristically illiterate when buying company stock, at least at first.

Mr. Musk bought Twitter at a sensitive time for the company, which is headquartered in San Francisco. Mr. Dorsey resigned as CEO in November and plans to leave the company’s board when his term ends this year, after facing an active shareholder and grappling with criticism from lawmakers and regulators over free speech, censorship and toxic content.

Mr. Dorsey handed over the reins to Parag Agrawal, Twitter’s chief technology officer, who had no niche in Silicon Valley than Mr. Dorsey did. Mr. Agrawal reorganized the company’s executive ranks. He is also very interested in A “decentralized” version of Twitterone of Mr. Dorsey’s recent pet projects in the company.

Under this effort, Twitter will turn online power into the hands of its users and challenge giants like Meta, the owner of Facebook and Instagram. Twitter is funding an independent effort to build a so-called open protocol for social media, integrate cryptocurrency into its app, and open up to developers who want to create custom features for Twitter.

What exactly Mr. Musk intends to do with his Twitter stake is unclear. He has criticized the company in recent weeks for failing to abide by free speech principles, and has argued that users should be allowed to choose algorithms that choose which tweets they view, or build their own, rather than relying on Twitter. to coordinate posts.

The idea was one of the ideas that Mr. Dorsey championed while he was leading Twitter. “The choice of which algorithm to use (or not to use) should be open to everyone,” he said last month in response to a tweet from Mr. Musk pushing for algorithms that foreigners could build for the platform.

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It is not clear whether Mr Musk will be asked – or invited – to join Twitter’s board of directors. He submitted a securities document called the 13G Deposit, stating that he planned the investment to be passive and that he had no intention of pursuing control of the company.

But Wall Street is already beginning to speculate that Mr. Musk could change his investment status, continue to buy Twitter shares or even try to take over the company outright.

“We expect this passive stake to be just the beginning of broader conversations with Twitter’s board/management that could eventually lead to an active stake and a more aggressive ownership role for Twitter,” said Daniel Ives, analyst at Wedbush Securities, in a comment. Monday morning.

Stephen Davidoff Solomon, a professor at the University of California, Berkeley School of Law, said the recording allowed Mr. Musk to “hide any intent he might have in connection with Twitter”. But he added that registering as a “passive investor” with the actual intent to lobby for control by switching file types is “fraudulent,” although it is rarely prosecuted and difficult to prove.

Mr Musk’s long and complex personal relationship with Twitter has already gotten him into trouble, with his tweets about Tesla’s finances leading to… legal hassles with SEC

If Mr. Musk pushes for change at Twitter, he won’t be the first agitated investor the company has to contend with. The activist firm Elliott Management took a position on Twitter and called for Mr. Dorsey to be impeached in 2020. This was subsequently done make a deal With Twitter that included a $1 billion investment from private equity firm Silver Lake and brought in new board members, including Silver Lake’s co-CEO, Egon Durban. Silver Lake teamed up with Mr. Musk In his efforts to take a private Tesla.

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The list of other business ventures developed by Mr. Musk is long. In addition to Tesla and SpaceX, he is the founder of The Boring Company, a tunnel construction services company. Adding a role to the list could upset Tesla shareholders. In the last two months of last year, Mr. Musk sold about $16 billion of Tesla stock, equal to about 10% of his stake in the electric car company.

Executives who have mixed media projects with other private endeavors have at times found themselves in a politician’s bind. Former President Donald J. Trump, for example, had a bleak view of Amazon because he disagreed with him Coverage in the Washington Postwhich was bought by Jeff Bezos in 2013. Tesla is a large recipient of environmental credits, while SpaceX is seeking government contracts.

For Mr. Musk, the investment could also increase the amount of noise he encounters on Twitter. Already on Monday, Twitter users were flooding the billionaire with requests for an edit button on the social media service and asking him to return some banned accounts.

Adam SatarianoAnd the Jack Ewing And the Peter Ives Contribute to the preparation of reports.