Eccentric billionaire Elon Musk has purchased 73 million Twitter (TWTR) shares, officially becoming the social media platform’s largest shareholder.
When the news of Musk’s substantial purchase broke on Monday morning, investors were quick to follow suit. The buying frenzy sent Twitter’s share price from $39.30 ($52.11 AUD) at market open to $49.97 ($66.26 AUD) at market close – a staggering 27% increase in just one day.
Musk’s stake in Twitter is now worth around $2.89 billion ($3.4 billion AUD).
Musk now controls more than four times the stock of its founder Jack Dorsey – formerly the largest stakeholder of Twitter – who owns just 2.25% of the company. Investing conglomerate, Vanguard is Twitter’s second-biggest shareholder, with an 8.79% stake.
The news comes in the wake of Musk’s recent antics on Twitter, where on March 25, he asked his 80 million followers whether or not Twitter was effective at protecting free speech – to which over 70% of respondents answered: “No.”
In response to this, just two days later, he asked: “Is a new platform needed?”
Musk is no stranger to expressing his opinions on Twitter. In March of this year, Musk challenged Russian President Vladimir Putin to a fist fight while war raged in Ukraine, and earlier in February he attracted widespread criticism for a tweet that compared Canadian leader Justin Trudeau to Adolf Hitler.
So, Is Now a Good Time to Buy TWTR Shares?
Putting Musk’s antics aside for a second, the real question is: will Twitter stocks board a SpaceX rocket to the moon or will the Musk hype subside only for Twitter’s recent decline in price to continue?
As you can see in the graph above, Twitter has been having a rough year, and even amongst the recent “Tech Crash” Twitter has been a consistent under-performer when it comes to share price.
According to CFRA Research analyst Angelo Zino, Musk’s decision to purchase such a massive portion of Twitter at its lowest price is a very good sign for investors.
“While a passive stake by Musk won’t change TWTR’s fundamentals, we do think his investment will drive greater interest from consumers… Musk’s actual investment is a very small percentage of his wealth, and an all-out buyout should not be ruled out.”
While Musk has made no comment on whether he intends to take control of the company, his enormous stake means that there really isn’t all that much to stop him if he were to change his mind. This is something that some experts find to be worrying, as it’s fairly safe to assume that the management team at Twitter aren’t thrilled with the move – especially after Musk has tweeted so much criticism of the company.
The good news for current or future Twitter shareholders is that the platform’s year long slump has been bucked. The bad news is that the value of TWTR shares is now completely linked to the impulses of an unpredictable Elon Musk.