Elon Musk has made a bold investment in Twitter, purchasing 73,486,938 shares, which equates to around 9.2% of the company according to a new SEC filing. While these are technically non-voting shares, there is a process that which large stakeholders can receive a board seat or other privileges.
Based on the current value, these shares are worth around US$3 Billion, which sounds like a lot, but given Musk has an estimated net worth of US$273 Billion, it’s a fairly insignificant percentage of his portfolio.
According to CNN, this makes Elon Musk the largest individual shareholder of Twitter. I don’t think it’s an accident that the next largest shareholder is The Vanguard Group, Inc. at 8.39%, this gives Musk some margin to maintain the top spot.
An important part of this equation is that Elon has 80 Million followers on Twitter and is one of the most prolific users. This means that his posts, now as a key investor will have clout inside the company, regardless of the type of shares he owns.
Free Speech
Last week, Musk ran a pole on Twitter regarding Free Speech. This poll asked the audience if they believed Twitter rigorously adheres to this policy. The result was a resounding 70.4% in the negative.
Musk followed up with a Tweet that suggests the result of the pole would be significant. Many took this to mean that he was considering standing up a rival social network. Today, we realise he had very different intentions, instead, buying a significant stake in the company.
On March 29th, Elon replied to a tweet regarding YouTube removing the entire video archive of Pulitzer winning journalist Chris Hedges, where he voiced his concern with Free Speech on social networks more generally.
The data
Elon also ran a poll recently that asked users if the Twitter Algorithm should be open source, there were more than a million responses and the result was a resounding yes. Let’s be clear, Elon has not taken the CEO role at Twitter, so he doesn’t get to make a business decision like this, but his future poles may be impactful on the prioritisation of development items and Twitter maybe even policies.
Financial
Financially Twitter Stock has not been a great investment, dropping around 5% since IPO back in 2014. The stock did reach a peak high of US$77.06 in Feb 2021, but has since been on a downward trend before today’s news.
The pre-market trading is showing Twitter stock up between 20-25% on the news of the company’s newest investor.
Improve the platform
There are many options for Elon to play a positive influence in improving Twitter as a service. Every time Elon tweets, the replies flood in, with many being spam replies from accounts that clone the profile photo, name in an attempt to impersonate Elon and get users to click through to some crypto scam.
While Elon may be hoping he can lend some of the AI expertise from his many companies to help solve this kind of problem, I expect there’s also a desire to accelerate Twitter’s product development and move with extreme urgency.
Twitter’s founder and now CEO of Square, Jack Dorsey and Elon Musk were both on a conference call with Cathy Wood at last year’s B Word Conference. This focused on Bitcoin, which Tesla famously invested US$1.5 Billion in.
Twitter has also recently got into the paid services game with Twitter Blue and among the services offered under the features included in this monthly fee was NFT support, allowing users to show off their favourite NFT in their profile photo.
It’s safe to say Elon wasn’t a fan of this.
One potential path forward could be to integrate a social payments platform on top of Twitter, using cryptocurrency. This could mean you don’t just see posts to link to events, but buy tickets on the platform, natively, using crypto.
