Elon Musk becomes majority shareholder of Twitter


Graphic by: Kayla Bugeya

Michael Huertas, Contributor

“Who controls the memes, controls the universe.” 

An oversimplified quote foreshadows the enormous investment that Elon Musk filed for on March 14. Later published on April 4, Musk became the majority shareholder of Twitter (TWTR) with a 9.2 percent passive stake. The 73,485,938 shares of common stock are worth $2.89 billion, from Twitter’s closing price as of Friday, April 8.

Twitter’s stock boosted to a 27 percent increase after the announcement. Just two weeks before the investment the SpaceX CEO posted a 24-hour poll on his Twitter account criticizing Twitter’s free speech practices. 

He wrote, “Free speech is essential to a functioning democracy. Do you believe Twitter rigorously adheres to this principle?” He replied to his thread stating “The consequences of this poll will be important. Please vote carefully.” 

Of the 2,035,924 million votes, 70.4 percent voted that Twitter “does not adhere to the principles of free speech.” Now he is asking if a new platform is needed, a question he is “strongly considering.”

Marisela Sutton, a University junior majoring in Entrepreneurship voiced, “Twitter’s algorithm is constantly agenda setting and suggesting political topics that I am not interested in. I hope they fix their issues of framing, because they are damaging to social movements and social media perception.”

The previous majority shareholder was Jack Dorsey, Twitter co-founder and former CEO. Following Musk, Twitter’s largest shareholders are The Vanguard Group (8.79 percent), Morgan Stanley (8.37 percent) and Blackrock (6.51 percent).

Musk, whose net worth is valued at nearly $288 billion, retracted his initial decision to join the Board of Directors, forfeiting his position to manage financial matters and rearranging the company’s system of business. His passive stake in Twitter represents his limitations of involvement, which do not allow him to modify the day-to-day operations and decisions.

Common stock acts as partial ownership in a company and is the type of stock most people invest in. The perks of a common stock investment include voting rights and the possibility of dividends and capital appreciation.

Newly instated Twitter CEO Parag Agrawal revealed, “Elon has decided not to join our Board.” The Board and Musk mutually agreed that it was in both of their best interests for The Board to remain as it is but they are open to his input, regardless of his involvement. Musk would have been eligible to serve on The Board until 2024.

Under the agreement to remain a director on The Board, Musk is prohibited from stockpiling more than 14.9 percent of TWTR shares. Now he is eligible to purchase as many shares as he wants, with critics speculating this is likely.

International Management major and French minor Sadie Ellis shared, “I will continue to use Twitter if he is involved because I feel like his knowledge of business and technology would be useful to Twitter. Twitter’s user base would be useful to Elon and his future career plans, too.”

Twitter primarily serves as a social media app, alternately functioning as an information resource and is the pinnacle of microblogging. Twitter can make news reach a worldwide audience in seconds and can dangerously spin the narrative of stories. There are currently 217 million monetizable daily active users on Twitter to date, representing a skyrocket in new user growth from prior years.

Musk is a frequent and outspoken Twitter user and has amassed over 80 million followers whom he frequently engages with. Musk’s influence on his fanbase is prominent as he can direct crowds to align with his beliefs. He often posts memes, calls out politicians and leaders, promotes SpaceX activities and is usually getting in trouble.

In 2018, Musk entered hot waters with the United States government for security fraud after a controversial tweet about Tesla’s stock prices. The tweet caused Tesla’s stock price to fluctuate, leaving investors profitless – marking the beginning of Musk’s legislative troubles. Tesla is still publicly traded and Musk did not have the funding to secure private trading according to AP News. He later stated that the tweet was not meant to be taken literally, hence the $420 target price, but Musk was sued and sent to the U.S. Securities and Exchange Commission (SEC).

Musk was then forced to withdraw from his role as Tesla chairman and obliged to pay a $20 million fine. He remained Tesla CEO, but the SEC punished him by pre-approving his future tweets. In 2022, Musk was denied dismissal of the court’s decisions, a deal that is currently still “unworkable,” his attorney added.

Many have debated if the SEC is infringing on Musk’s first-amendment rights to Free Speech. For Twitter users, the investment will not change the daily functionality of the application but will highlight a change in direction for the Silicon Valley company. Though Elon is a passive shareholder, he now has a direct link to the Twitter CEO and executives, respectfully. His true influence is still developing.

Twitter users have asked for an edit button since the early days of the app, of which Elon turned to his Twitter following via a poll on April 4. The results are likely used as statistical research for new application suggestions. The poll accumulated over four million votes, and the results showed that 73.6 percent were in favor of an edit button. A popular suggestion for the edit button among users agreed to two conditions: limited availability to edit your post, five to ten minutes and a link that shows the edit to keep a public record. 

As of April 13, Twitter shareholders asserted their frustrations that Musk’s late disclosure to file his shares caused shareholders to miss out on profits while he collected. He is being sued by the shareholders because of another violation of an SEC securities law to notify them within 10 days of acquiring more than five percent ownership of the company.