Last weekend, Tesla Inc. (NASDAQ:TSLA) CEO Elon Musk posted a poll on his own Twitter in which he asked whether Twitter Inc. (NASDAQ:TWTR) adheres to the principle of free speech. "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?" Musk posed.
More than 2 million people responded to Musk's poll, with 70.4% answering "no" and Musk tweeting, "Am giving serious thought to this," after one of his followers asked him whether he would consider establishing a new social media platform "that would consist an open-source algorithm, one where free speech and adhering to free speech is given top priority, one where propaganda is very minimal."
Musk, the world's richest person, is a real tweeter-in-chief, and his sometimes erratic and even marijuana-infused trolling is not only considered unusual for such a high-caliber company executive but landed him in trouble back in 2018 after he took to the social media platform and divulged plans to privatize Tesla, which remains a public company.
But it appears Musk was not trolling this time around: TWTR stock has jumped 24% on Monday morning after Twitter disclosed that the Tesla boss had taken a passive stake of ~9.2% in the social media company.
As reported in the Issuer's Annual Report on Form 10-K for the year ended December 31, 2021, Elon Musk Revocable Trust, of which Elon Musk is the sole Trustee, holds 73.48M common shares of Twitter of the company's 800.6M common shares as of February 10, 2022.
Just the Start
Wedbush Securities analyst Dan Ives believes this is "just the start."
In a note to clients, Ives points out that Musk has long been critical of Twitter for what he believes is a failure "to adhere to free speech principles," which "fundamentally undermines democracy."
Ives says Musk's 9.2% passive stake is likely to be the start of more conversations with the company's board and management and could lead to an active stake and perhaps a "more aggressive ownership role of Twitter."
Twitter has come under heavy criticism after it suspended the account of The Babylon Bee last week after the satirical humorous site posted a story about the U.S. Assistant Secretary of Health Rachel Levine, who is a transgender woman.
Whether or not Musk actually sets up his own social media platform, of course, remains to be seen. However, the market for social networks that are alternatives to sector kingpins like Twitter and Meta Platform Inc.'s (NASDAQ:FB) Facebook has clearly been expanding with the launch of former President Donald Trump's Truth Social network, which went live in February.
Trump SPAC Digital World Acquisition (NASDAQ:DWAC), which is taking Trump's social media company public, has plunged 11.5% in Monday intraday trading after news emerged about Musk's Twitter buy as well as a Reuters report that two executives have left Truth Social.
Truth Social officially launched in late February, which sent the SPAC's shares up 10% on the platform's first full day. Since hitting a high of over $97/share in early March, the shares have plunged 40% through Monday morning.
Ives, who also covers Tesla, says Musk's latest move is part of his "building out his tentacles" and is not concerned with the tech chieftain "taking his eye off the ball" with regarding either Tesla or SpaceX.
Tesla has been making headlines on its own and has gained nearly 5% on Monday after releasing Q1 deliveries data. The company revealed that it had delivered 310K vehicles in Q1, slightly less than the official analyst consensus of 312K. Dan Ives estimated that up to 25K units were pushed out into Q2 due to logistical and factory issues.
By Alex Kimani for Safehaven.com