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New York(CNN Business)Elon Musk recently purchased 9.2% of Twitter stock, according to a filing Monday, making him the largest shareholder in the company.
News of the purchase sent shares of Twitter (TWTR) soaring 22% in early trading. Musk did not disclose what he paid for the shares, but his stake was worth $2.9 billion as of the close of trading Friday, and $3.5 billion after the spike early Monday.
Musk's filing did not disclose the purpose of the purchase or any plans for the company. But he has been a high-profile critic of Twitter policies in the past. Last month he said he was giving "serious thought" to creating a new social media platform
"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?"
Any time an investor buys 5% or more of a company's shares, they must disclose the purchase in filings with the Securities and Exchange Commission. Although a stake of less than 10% in a company is considered "passive" in the eyes of Wall Street, it could signal an effort by Musk to take a more active role in how Twitter is run. That is one of the factors prompting other investors to buy shares and drive up the price early Monday.
"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 change the way Twitter operates, his large purchase could prompt some other activist investors to take a stake in the company, Ives said.
"One way or another, he's going to change the course of Twitter," Ives said.
Ives said it's probably not realistic for Musk or anyone else to try to start building a new, competing platform from scratch. Thus it makes more sense for him to try to change practices at Twitter itself.
Twitter did not have an immediate response to a request for comment on Musk's investment.
Musk among most popular tweeters
Musk has 80 million Twitter followers, far more than any other CEO. And he is a frequent tweeter, using it as the major form of disseminating news about both Tesla (TSLA) and SpaceX, the two companies he leads, neither of which has the traditional public relations department in place at other companies.
His tweets have gotten him in trouble at times, though.
In 2018 Musk tweeted that he would be taking Tesla private at a price of $420 a share, and that he had "funding secured" to do just that. It later became clear that while he did have discussions about funding such a bid, the funding was by no means secured.
Musk settled the case by giving up his role as Tesla's chairman, although he remains its CEO. He and Tesla each paid a $20 million fine as well, with Musk compensating the company for its payment by purchasing an additional $20 million in Tesla stock.
He also agreed to have any of his future tweets that might contain material information about the company reviewed by other executives at Tesla before sending them. The SEC has questioned whether or not he is complying with that provision of the agreement, and Musk and the agency are fighting about that matter in court.
Elon Musk buys 9.2% stake in Twitter, making him the largest shareholder
Elon Musk recently purchased 9.2% of Twitter stock, according to a filing Monday, making him the largest shareholder in the company.
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