If you can’t beat ’em, join ’em. But it might be better to buy ’em, or so it appears Elon Musk has decided.
And let’s face it — if Musk wants to buy something, there isn’t much to stop him.
Last week, the billionaire entrepreneur offered up a Twitter poll on the platform’s commitment to free speech. No one takes these polls or results seriously, but Musk warned his followers that their choices would have serious “consequences”:
The consequences of this poll will be important. Please vote carefully.
— Elon Musk (@elonmusk) March 25, 2022
Today we found out what those consequences are. Musk has leveraged himself into position to at least dictate some negotiations over Twitter’s policies, buying up nearly 10% of Twitter stock:
Elon Musk has taken a 9.2% stake in Twitter Inc. to become the platform’s biggest shareholder, a week after hinting he might shake up the social media industry.
Twitter shares surged about 26% in premarket trading after the regulatory filing released Monday detailing Musk buying the holding. The stake is worth about $2.89 billion, based on Friday’s market close.
Now that’s putting your money where your mouth is. Must be nice to be able to drop three billion dollars based on the results of a Twitter poll. I kid, I kid; obviously Musk had this move up his sleeve for a while, and used the Twitter poll as a great big hint as to what was on his mind.
One has to wonder what Musk has in mind by buying his way into Twitter’s executive suite. ABC News thinks this will be a “passive” investment — at first:
Musk’s stake in Twitter is considered a passive investment, which means Musk is a long-term investor that’s looking to minimize his buying and selling of the shares.
However, Musk has been raising questions about the ability to communicate freely on Twitter, tweeting last month about free speech and the social media platform and industry analysts were skeptical about the mercurial CEO remaining on the sidelines anywhere.
“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,” Dan Ives of WedBush Securities wrote in a client note early Monday.
It seems rather doubtful that Musk would spend $3 billion to remain on the sidelines of Twitter. He could do that much by just keeping up his gadfly persona on the platform. Buying 10% of the company means that Musk has a lot more power and leverage, especially given how unhappy longer-term investors must be in their stock. In the nine months, the stock has shed all of the gains it made over the previous two years:
If I were a significant long-term investor in Twitter, who would I trust more with the leadership of the company — the speech-code-obsessed Jack Dorsey or the multi-platform entrepreneur backing free speech? Just the 26% gain overnight would grab my attention for at least long enough to hear Musk make a pitch for a new direction.
Plus, Twitter investors have this to worry about, too. Remember how Musk ended the thread on the poll?
Is a new platform needed?
— Elon Musk (@elonmusk) March 26, 2022
To paraphrase LBJ, it’s better to have the multi-platform super-billionaire inside the tent pissing out than outside the tent pissing in. Musk represents a real threat to the platform on his own too, unlike Donald Trump, who seems more interested in just building a campaign platform. Had Musk used that $3 billion to launch a competitor to Twitter, he may well have succeeded in at least gaining a significant market share of activity — and attracting enough Twitter investors to cripple that platform’s ability to innovate.
Instead, Musk decided to buy his way into the original platform to achieve whatever goals he has in mind. That, however, leaves Twitter with a big problem — which billionaire gets to stay inside inside the tent? Given Musk’s public criticism, the company’s not gonna be big enough for both Jack Dorsey and Elon Musk. ABC may see Musk as passive, but no one else should be that foolish, and you can bet Dorsey & Co aren’t betting that way. And since Musk could still take his money and friendly investors with him into a new venture, Dorsey & Co should be very, very nervous this morning.
Personally, I’d prefer a competitive new platform run by non-politicos to this kind of maneuver in terms of real social-media reform. But personally, I don’t have $3 billion to spend this morning, so I’ll take what I can get, and just invest in popcorn instead.
Side note: That Twitter poll from last week might catch the attention of the Securities and Exchange Commission at some point. Musk has already gotten crosswise with the SEC over his tweets. Three days before Musk’s Twitter poll, the SEC reminded the federal court in Manhattan of a settlement Musk was forced to make over his 2018 Twitter poll on whether he should dump Tesla shares, which triggered a brief sell-off. Musk recently challenged a subpoena for records relating to that tweet and to be relieved of the requirement to get SEC approval over any tweet involving Tesla before publishing it. Wanna bet that they’re going to be interested in this tweet, too?
