Elon Musk, the man widely known as the Tesla chief, the Space X founder, and the world’s richest man, set the financial and tech world ablaze yesterday when news broke out that he spent a staggering $3 billion to secure a 9.2 per cent stake in Twitter. With this, Musk became the single largest shareholder of the social media company, effectively owning quadruple the amount of stakes as the founder of Twitter, Jack Dorsey (2.25 per cent).
What does this news mean for Twitter?
How much of an active role will the entrepreneur have with his new venture? Although Musk’s latest investment is classified as a “passive” stake, meaning that he does not seek to influence or change control of how the social media giant is run, the jury is still out on that one. Just last month, Musk, an avid Twitter user himself, criticized Twitter for “failing to adhere to free speech principles”, which, according to the Tesla CEO, “fundamentally undermines democracy”. On Monday night, just hours after the news of his newest investment came out, Musk asked his 80+ million followers – via a Twitter poll – if they wanted an edit button, a feature that has long been requested by users of the platform, but still never offered.
Whether Musk decides to stay passive, or eventually decides to follow a more active and “assertive” route, Twitter shares soared 27% on Monday, which is the highest level the social media company hit since November 2021. Only time will tell whether Elon Musk will be an ordinary shareholder or not. Analysts, though, believe that eventually, he will become actively more involved.
According to Jill Fisch, a securities law professor at the University of Pennsylvania “the idea that Elon Musk falls within a passive category is probably a stretch. He’s not the most passive guy. Is Elon Musk really going to be happy with a stake of this size, and remaining passive?”. It remains to be seen what it would mean for Twitter if he does decide to bring changes to the company.
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