Elon Musk takes 9% stake in Twitter, sending shares higher

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Twitter’s stock rose 19% to $46.88 in premarket trading, paring earlier gains of more than 25% after Mr. Musk’s stake was revealed.

In a securities filing disclosed on Monday, Mr. Musk reported owning almost 73.5 million shares of the company, a roughly 9.2% stake. That stake, valued at $2.89 billion as of Friday’s closing price, would make Mr. Musk Twitter’s largest shareholder, according to data from FactSet.

In recent weeks, Mr. Musk, the world’s richest person, has taken to Twitter to question the company’s commitment to free speech and said he was considering starting a rival social media company of his own.

On March 25, Mr. Musk tweeted a poll, saying, “Free speech is essential to a functioning democracy. Do you believe Twitter rigorously adheres to this principle?”

“The consequences of this poll will be important. Please vote carefully,” Mr. Musk added in a follow-up tweet.

More than 70% of the roughly 2 million people who responded voted no.

Representatives for Twitter and Tesla didn’t immediately return a request for comment.

“It looks like Elon has his eyes laser set on Twitter,” Wedbush Securities analyst Dan Ives wrote in a research note Monday morning. “We would expect this passive stake as just the start of broader conversations with the Twitter board,” he said, noting that it could lead to an active stake and potentially a more aggressive ownership role at Twitter.

Mr. Musk has a net worth of $273 billion as of Monday, according to the Bloomberg Billionaires Index, a ranking updated daily of the richest people in the world.

In recent years, Twitter and Meta Platforms Inc.’s Facebook and Instagram have faced criticism for censoring speech and not playing a prominent enough role in moderating content on their platforms.

Algorithms are commonly used on social-networking platforms to drive engagement. The more time people spend scrolling through their feeds, the more ads they can be served and the more money the platforms can make. The code can be written to feed on users’ behavior to serve up more of the same kind of information that users initially expressed interest in.

Mr. Musk polled his Twitter followers on March 24, asking them whether, “Twitter algorithm should be open source.”

Twitter co-founder Jack Dorsey, who stepped down as CEO last year, then re-tweeted Mr. Musk’s poll, saying, “The choice of which algorithm to use (or not) should be open to everyone.”

There have been other attempts to compete with today’s mainstream social platforms, some more successful than others. Ones such as Gab and 4chan are known for their loose content controls and have developed modest followings over the past several years. More recently, Parler launched in 2018, billing itself as an unbiased, free-speech alternative to larger social platforms, and this year former President Trump’s Truth Social emerged as another.

Mr. Musk has long been active on Twitter, sharing with his more than 80 million followers information about his businesses, including electric-vehicle maker Tesla, rocket company Space Exploration Technologies Corp. and transportation company The Boring Co.

In a now-infamous 2018 tweet, Mr. Musk said he was considering taking his electric car maker private and had secured funding at $420 a share.

That sent the stock surging and prompted an investigation by the U.S. Securities and Exchange Commission, which found that Mr. Musk had never discussed the specifics of such a going-private deal. and that his statement constituted fraud.

Mr. Musk and Tesla settled the SEC lawsuit in 2018 by each agreeing to pay $20 million, and Mr. Musk stepped down as chairman. He also agreed to preclear tweets that were deemed material to Tesla shareholders with Tesla’s lawyers.

Last month he asked a federal judge to scrap a settlement with regulators about the 2018 incident.

He has also used Twitter to publicly attack the SEC.

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