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Shares of Twitter Inc. rocketed toward a five-month high Monday, after it was disclosed that Technoking of Tesla Elon Musk had acquired a large stake in the social media company.
The stock
TWTR,
rose 26.2% in premarket trading, putting it on track to open at the highest levels since mid-November. To put that rally in historical perspective, the stock hasn’t advanced more than 26% in a day since it shot up 26.8% on Oct. 23, 2009.
In a Schedule 13G filing with the Securities and Exchange Commission, Tesla Inc.
TSLA,
Founder Musk had acquired 73.49 million shares of Twitter, or 9.2% of the shares outstanding.
At Friday’s closing price for Twitter shares of $39.31, Musk’s stake would be worth $2.89 billion. At current prices, that stake would be valued at more than $3.6 billion.
Musk has been under close scrutiny by securities regulators, following his August 2018 tweet about having “funding secured” to take Tesla private. More recently, the SEC subpoenaed Musk and the electric vehicle market leader regarding oversight of Musk’s tweets, which Musk believes is “inequitable” and blocks his First Amendment rights.
Wedbush analyst Dan Ives said it has been thought that given his “long-standing critical view of Twitter and social media platforms,” it was believed that Musk could look to build a competitor to Twitter and other social media platforms. “Instead, it looks like Elon has his eyes laser set on Twitter,” and Ives expects Musk to start conversations with Twitter management that could lead to a more active stake “and a potential more aggressive ownership role of Twitter.”
Musk’s investment comes as Twitter’s stock has started to recover recently after a tough 2021, relative to its peer group and the broader stock market. Twitter’s stock has lost 9.1% year to date, but closed Friday 21.3% above its 20-month closing low of $32.42 on March 7. In 2021, Twitter shares had tumbled 20.2% while the SPDR Communications Services Select Sector exchange-traded fund
XLC,
rallied 15.1% and the S&P 500 index
SPX,
had run up 26.9%.
Elon Musk is currently listed as the world’s richest person, with a total net worth of roughly $273 billion, according to the Bloomberg Billionaires Index, as Tesla’s stock has gained 2.6% so far this year after soaring 49.8% last year.
