Elon Musk, The CEO of Tesla is now become the biggest TWITTER stock shareholder, less than two weeks after denouncing the social media site on the basis of free speech, and Twitter stock has soared.
How Elon Musk Became The Biggest Twitter Stock Shareholder?
According to a filing with the Securities and Exchange Commission, Musk purchased 9.2 percent of Twitter (ticker: TWTR) stock on Monday, causing the stock to rise over 25%. The stock of Tesla was up 3.4 percent. The 500 index increased by 0.3 percent, while the Dow Jones Industrial Average fell by 0.1 percent.
How Musk Helping Twitter In Business And Achieving Goals ?
Given that Twitter serves as the de facto public town square, failing to adhere to free speech principles fundamentally undermines democracy.
What should be done? https://t.co/aPS9ycji37
— Elon Musk (@elonmusk) March 26, 2022
“Twitter has long been chastised for failing to realize its full potential, and TWTR shareholders are hopeful Musk can help the business achieve that goal,” stated Bespoke Investment Group.
The previous year’s performance of the two equities could hardly be more dissimilar. TESLA has risen 57% as it has become clear that electric vehicles are the way of the future and that Tesla has a significant lead over other automakers. Twitter, on the other hand, has fallen 39% as high-priced internet stocks have been penalized, primarily due to factors beyond their control.
How Musk Is Helping Twitter ?
One of the most significant was the Federal Reserve’s change to tighter monetary policy, which has a negative impact on high-priced growth businesses’ valuations.
The price/earnings ratio for Twitter over the next 12 months has dropped to 43.9 from 66.9 five months ago. Tesla has had a difficult time in terms of valuation, but it has been expanding earnings in real time, possibly buffering the stock from higher rates even as its P/E has plummeted to 92.1 from 158.3 five months ago.
Now, Musk has boosted Twitter’s stock significantly. His Twitter position is believed to be a passive one, but as the stock’s reaction demonstrates, Musk does very little that is passive, and his mere existence is providing Twitter a major boost. Musk recently used Twitter to urge that Twitter should “fundamentally adhere to free speech norms.”
Elon Musk Started Starlink Service In Ukraine
Starlink has been told by some governments (not Ukraine) to block Russian news sources. We will not do so unless at gunpoint.
Sorry to be a free speech absolutist.
— Elon Musk (@elonmusk) March 5, 2022
Soon after giving Starlink internet connectivity to Ukraine to aid in the country’s war against invading Russian forces, Musk charactezised himself as a free “speech absolutist.” Despite his sympathy for Ukraine, Musk refuses to restrict Russian news sources.
SpaceX, another firm founded by Musk, offers Starlink, a space-based high-speed internet service. As of mid-February, there were more than 250,000 Starlink terminals in use.
Is It Musk Gonna Found A New Social Media Platform ?
The Twitter stake appears to eliminate one minor risk for Twitter: Musk launching his own social media platform. After Musk tweeted in late March, “Is a new platform needed?” this hypothesis gained traction.
Musk’s position, according to Wedbush analyst Dan Ives, will become less passive over time.
“Given Musk’s long-held scepticism of Twitter and other social media platforms, it was speculated that Musk may consider creating a new social media platform to compete with Twitter and others,” he wrote. ”
Instead, it appears that Elon has his sights set on Twitter, and we would anticipate this passive stake to be just the beginning of deeper discussions with the Twitter board/management that might eventually lead to an active stake and a more aggressive ownership role for Twitter.”
Don Bilson, A Gordon Haskett Analyst, Also Doesn’t Cover Twitter Stocks: Here Is The Detail Analysis ?
The stock of Twitter is not covered by Ives. He covers Tesla and rates the stock as a Buy. His price target for the stock is $1,400 per share. Don Bilson, a Gordon Haskett analyst, also doesn’t cover Twitter. He writes about unusual scenarios, such as the world’s richest individual owning a significant share in a social networking platform.
Musk has a prior engagement with private equity firm Silver Lake Partners, according to Bilson in a note Monday. A few years ago, Silver Lake purchased a big interest in Twitter. Silver Lake is still a venture capitalist.
“We don’t think anyone should bet against Musk and Silver Lake taking [Twitter] private,” Bilson wrote. “As far as we can tell, this is a Ryan Cohen move on steroids.” Cohen, of course, is the founder of Chewy, which sparked a fire at GameStop and is now working on a project at Bed, Bath & Beyond.”
There’s a lot going on right now. What happens next
will decide if Twitter’s recovery is sustainable.