According to a filing Monday, Elon Musk just bought 9.2 percent of Twitter stock, making him the company’s largest shareholder.
Twitter (TWTR) stock soared 22% in early trade after the transaction was announced. Musk did not say how much he paid for the stock, but it was worth $2.9 billion as of Friday’s closing, and $3.5 billion following the early Monday rise.
“Given that Twitter serves as the de facto public town square, failing to adhere to free speech principles fundamentally undermines democracy,” Musk tweeted last month. “What should be done?”
When an investor purchases 5% or more of a company’s stock, they must report the transaction to the Securities and Exchange Commission. Although a holding of less than 10% in a firm is deemed “passive” by Wall Street, it might indicate Musk’s desire to play a more active role in Twitter’s management. This is one of the causes that prompted other investors to acquire shares early Monday, causing the price to rise.
“I think he intends to go active and force change at Twitter,” said Dan Ives, tech analyst as Wedbush Securities. “This is a shot across the bow at Twitter’s board and management team to start discussions.”
Even if Musk doesn’t try to modify Twitter’s business model, Ives believes that his massive investment will encourage other activist investors to invest in the firm.
“One way or another, he’s going to change the course of Twitter,” Ives said.