Following news that Elon Musk took a 9.2 percent stake in Twitter (NYSE: TWTR) this morning, analysts are beginning to dissect the moves of the Tesla CEO and whether his now-passive stake in the social media platform will become active. Wedbush analyst Dan Ives said this morning that the firm believes Musk could have an active role in the coming weeks or month, speculating that Twitter could have a new look entirely if the CEO of the leader in EVs decides to expand his role.
“This is just the appetizer,” Ives said on Yahoo! Finance this morning. “Ultimately, we believe he will have an active stake over the coming weeks or month. This is just a start. I think he will have a broader strategic focus on Twitter, whether it’s changing the slate, changing the management team, or ultimately a buyout. Just to be clear, this is just a start of what I believe is going to be a much more active role for Musk at Twitter.”
Musk’s stake is worth approximately $3 billion, and news of the purchase sent Twitter shares up over 29 percent during Monday trading. His stake is currently labeled as a passive one, meaning the shareholder has no say or truly active part in a company’s operations. Musk assuming an active role, with his largest shareholder status in Twitter, would essentially give him all of the responsibilities to restructure Twitter’s policies and team members. Based on Musk’s recent Tweets, if he becomes an active shareholder, you can bet there could be a massive shake up in censorship on the platform.
Musk’s move to acquire a near-10 percent stake in the social media platform comes just weeks after he questioned the platform’s ability to allow free speech. Musk ran a poll that accumulated 2,035,924 votes, with 70.4 percent stating they did not believe Twitter “rigorously adheres” to the principle that free speech is essential to a functioning democracy. “The consequences of this poll will be important. Please vote carefully,” Musk added.
Free speech is essential to a functioning democracy.
Do you believe Twitter rigorously adheres to this principle?
— Elon Musk (@elonmusk) March 25, 2022
“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 added to his string of Tweets bringing free speech practices into question.
Musk has hinted at creating his own platform in the past. However, Twitter is a massive company with an already-established presence of 206 million monetizable daily active users worldwide as of Q2 2021.
As for Ives, he does not think Musk’s work with Twitter is done. “I think there’s no one out there that believes he’s just going to end with a 9.2 passive stake.”
At the time of writing, $TWTR shares were up 29.14 percent on the day, trading at $50.74 as of 1:03 PM EST.
Ives holds a $1,400 price target on $TSLA stock and reiterated an Out-Perform rating.
Disclosure: Joey Klender is not a Twitter Shareholder. He is a Tesla Shareholder.
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