Having already established himself in the automotive and aerospace businesses, Elon Musk is now venturing into social media. Musk has acquired a 9.2 percent stake in Twitter, making him the company's biggest shareholder. Here's why.
The Context Behind Elon Musk's Purchase
Elon Musk boasts an impressive 80 million followers on Twitter. He has, however, a history of posting controversial tweets that have either raised the stock price of his company or, in one case, made a crypto coin fly to new heights.
In 2018, Elon Musk was fined for claiming to have sufficient funding to take Tesla private, increasing the company's share price. According to the SEC's official press release, he paid a hefty fine of over $40 million to settle the case.
Furthermore, Reuters reported that he isn't happy with the SEC's recent refusal to let him end the 2018 agreement, which involves monitoring his Twitter usage and requiring the pre-approval of tweets.
In the background of all that, in April 2022, Musk conducted a poll asking his followers whether Twitter adheres to free speech or not. More than 70% of the 2 million votes he received voted no, suggesting Twitter isn't as democratic as it should be. At least according to Elon Musk's acolytes.
Elon Musk clearly isn't happy with the company's attitude to freedom of speech. And in response to another user, even suggested he could start a rival platform of his own.
Why Has Elon Musk Purchased So Many Twitter Shares?
Considering the difficulty of setting up a social media platform (see Donald's Trump's failed attempts with Truth Social) and the time it would take to reach Twitter's level, buying into an established company makes more sense.
Musk is known as a champion of free speech, and so may have bought himself a place on Twitter's board of directors in order to influence its policies there.
Because of his commitment to freedom of expression, the first possible reason for him to buy Twitter could be to influence the platform to work in favor of freedom of expression. He's even suggested Twitter's algorithm should be open source, another idea that his followers seem to be on board with.
The Consequences of Elon Musk's Twitter Buy-In
The impact of Elon Musk's purchase was immediate, as Twitter's share price rose by over 26 percent on the same day it was announced. Considering how much its share price has suffered in recent years, that's a good sign for the company.
Musk also wasted no time in trying to upset the proverbial apple cart, asking his followers whether Twitter should allow users to edit their tweets. Users have been asking for this feature for years, so it's no surprise that the majority of Musk's followers said yes.
What Will Elon Musk Do Next at Twitter?
Twitter has since acted fast to get Elon Musk more involved in the company, offering him a seat on the platform's board of directors. However, it remains to be seen whether Musk decides that's enough for him.
After all, the multi-billionaire could, if he wanted, buy Twitter outright and rebuild it as he sees fit.