Elon Musk buys minority stake in Twitter

Tesla boss Elon Musk was outed as owning almost 10 per cent of Twitter on Monday, prompting a massive run-up in shares of the company of which he is now the largest owner.

The disclosurecomes close on the heels of his tweet that he was giving a "serious thought" to building a new social media platform, while questioning Twitter's commitment to free speech.

A filing showed that Musk owns 73.5 million Twitter shares, which were worth roughly $2.9 billion US based on the $39.31 share pricewhen the stock market closed on Friday. That's a9.2 per centstake in the company.

On Monday morning, the price of Twitter shares rocketedon the news to more than $48, pushing Musk's stake up in the process.

Questions about Twitter's future

Musk seemingly acknowledged the news in a cryptic message on Monday, telling his 80 million followers "Oh hi lol," on where else Twitter.

According to a regulatory filing, Musk started acquiring shares in Twitter on March 14, exactly three weeks ago.

While it is well short of a controlling interest, Musk's stake isalready raising questions about whether he will buy more of the company, or push for changes in how it operates.

"[He]is not someone that just passively puts a toe in the water," WedbushSecurities analyst Dan IvessaidMonday. "Investors on Wall Street view this as the first step toward him driving significant change," including a possible full takeover, he said.

"If he goes down a direction, usually goes aggressively, dives in the deep end of the pool. Musk has been clear about his criticism of Twitter and obviously he's taking it to the next level. If you can'tbuild a social media platform, why not try to buy one?"

Brooke Erin Duffy,a communications professor at Cornell University in Ithaca, N.Y., saidit's not surprising to see the social media space being a focus for billionaires like Musk.

"The key commodity of the contemporary moment is news and information," she saidon Monday.

"It'sthe new sandbox where entrepreneurs want to play."

Given how important social media giants are in our society, Duffydoes worry that the company maynow face pressureto be more allowing of hateful and abusive content under the guise of free speech. "Twitter in particularhas been notorious for not protecting users enough."

Musk very active on Twitter

A prolific Twitter user, Musk has amassed 80 million followers since joining the site in 2009, and has used the platform to make several major announcements, including teasing that he was going to take Tesla private at $420 a share.

The company's shares took off on the report, but no such deal was in the works, which is a big reason why he has garnered close scrutiny from regulators ever since. In October2018, Musk and Tesla agreed to pay $40 million in civil fines and for Musk to have his tweets approved by a corporate lawyer because of that saga.

But his lawyers are now fighting to have that deal torn up.

Last month,Musk asked U.S. District Court Judge Alison Nathan to nullifythe settlement agreement. His lawyer, Alex Spiro, said the Securities and Exchange Commission (SEC) has used the court agreement "to trample on Mr. Musk's First Amendment rights and to impose prior restraints on his speech."

As part of that court battle, the SEC has revealed it is alsoprobing a Musk tweet from last November in which he asked his followersif he should sell 10 per cent of his Tesla stockto pay his taxes.

While news of the deal sent the value of the company skyward, some analysts say the move could be more trouble than it's worth for Twitter.

The company was targeted by activist shareholders Elliot Management Corp. last year because they didn't like that Jack Dorsey was CEO of Twitter but also of payment firm Square. The shareholders argued that one person couldn't fully do both jobs at once, and that Twitter was suffering because of it.

Elliot Management seemingly won that fight when Dorsey resigned as CEO of Twitter last year.

WATCH | Elon Musk buys stake inTwitter:

Elon Musk becomes Twitters largest shareholder, sparking questions on motive

2 years ago

Duration 2:03

In an unexpected move, Tesla CEO Elon Musk acquired a 9.2 per cent stake in Twitter becoming the social media companys largest shareholder. Musk hasnt publicly disclosed a motive, but some experts say theyre concerned he could use his stake to change the tone of Twitter.

News that Musk is now taking a stake in the company could bring similar headaches, especially if he tries to buy the whole company, or push for changes there.

"Though we don't expect the company to be taken private in the near term, this could present a challenge for new CEO Parag Agrawal, who has focused on new products to aid monetization," Bloomberg Intelligence analyst Mandeep Singh said.

"Musk's suggestions could be at odds with activists Elliott and Silver Lake, which are more focused on improving operations and free cash flow."