Today, shares of Twitter (NYSE:TWTR) stock are flying higher by more than 25% after Tesla (NASDAQ:TSLA) CEO Elon Musk disclosed a passive 9.2% stake. The 73.5 million share purchase makes Musk the largest shareholder of Twitter. Additionally, the stake is worth roughly $2.9 billion based on Friday’s closing price.
Last month, Musk hinted at this TWTR stock purchase in a series of tweets. Specifically, the CEO tweeted out a poll asking followers if they believed Twitter adheres to free speech. The executive then replied to his own tweet, stating that “The consequences of this poll will be important. Please vote carefully.”
Free speech is essential to a functioning democracy.
Do you believe Twitter rigorously adheres to this principle?
— Elon Musk (@elonmusk) March 25, 2022
That said, it is interesting that Musk has decided to take a passive stake in the social media company, as evidenced by the 13G filing. A 13G filing means that the acquirer is “not interested in pursuing an activist agenda.” If Musk had wanted to take an activist position, he would have filed a 13D form. Recently, acclaimed Wedbush analyst Dan Ives gave his take as to why Musk filed a 13G:
“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.”
Elon Musk Just Bought TWTR Stock
So, why did Elon Musk just buy TWTR stock? Well, the executive has a history with the platform, for one. He is an active user, with more than 80 million followers. That makes him the 10th most-followed account.
Furthermore, Musk has stirred up controversy in the past via Twitter. In 2018, for example, he tweeted that Tesla had secured funding to take it “private at $420.” After that post, shares of TSLA stock immediately shot up. The tweet eventually prompted the U.S. Securities and Exchange Commission (SEC) to open an investigation against the CEO, which claimed Musk had misled investors.
That case was settled after Musk agreed to pay the SEC $40 million. In addition, Musk was required to step down as chairman of Tesla and limit his tweets. The SEC also tasked an “in-house official” with reviewing his tweets before being sent.
On March 29, however, Bloomberg reported that Musk is now accusing the SEC of “misconduct.” The CEO claims his free speech is being limited and wants to “block an SEC subpoena seeking information about Tesla’s public-disclosure controls.” Clearly, the dispute between Musk and the SEC still isn’t over.
On the date of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
