Elon Musk becomes the largest shareholder of Twitter, and Twitter's stock price surged 30% overnight.

According to the US Securities and Exchange Commission (SEC) filings on Monday, $Tesla (TSLA.US)$ Founder and CEO Elon Musk already holds 73.487 million shares of Twitter, accounting for 9.2% of common shares, making him the largest single shareholder of Twitter.

According to Twitter's public information at the end of 2021, the largest single shareholder is VANGUARD GROUP INC, holding 8.8% of Twitter's total capital stock.

It is important to note that although Musk has become the largest individual shareholder of Twitter, it does not mean that he has become the actual controlling shareholder of Twitter.

Twitter had its best day since going public. As of the US stock market close, Twitter rose by 27%, closing at $49.97 per share, with an intraday high increase of over 30%. The total market cap soared from $31.5 billion to $40 billion, an overnight increase of $8.5 billion, equivalent to about 54 billion RMB. Based on Twitter's closing price, Musk's shares are valued at $3.672 billion, approximately 23.3 billion RMB.

At the same time, Tesla also surged by 5.61%, with a market cap increase of $62.929 billion, approximately 400 billion RMB.

Musk is selling more stocks.

Had over $5.7 billion in cash before buying Twitter stocks.

Why did Musk invest in Twitter? Some believe it is for wealth diversification.

As the world's richest person, Musk has sold multiple luxury homes in California and vowed in 2020 to 'no longer own any real estate,' with his wealth mainly in stocks. As of last Friday, Musk owns about 17% of Tesla's shares, with a current market cap of $1.184 trillion. Bloomberg's Billionaires Index shows that Musk also owns nearly half of SpaceX, his private space exploration company, valued at around $40.3 billion.

Last year, Musk initiated a poll on Twitter asking his fans whether he should sell 10% of his Tesla shares. From November to December 28 last year, Musk sold 15.7 million Tesla shares, worth $16.4 billion, to cover over $11 billion in tax bills related to exercising stock options and rewards.

According to the Bloomberg Billionaires Index, even after deducting the taxes estimated by Musk himself, the profits from selling these stocks left him with over $5.7 billion in cash before acquiring Twitter shares.

However, he is also exercising options to buy more Tesla stocks. As of December 31st last year, he had exercised all the options expiring in 2022. SEC filings show an exercise price of $6.24, while Tesla's current stock price is as high as $1145.45.

According to Musk's compensation plan, whenever Tesla achieves certain financial performance and market cap targets, he can receive different options. The market cap targets have all been met, and the financial targets may soon be achieved.

Tesla has accounted for a total of 25.2 million new options for Musk. Wall Street analysts estimate that Musk could receive 8.4 million options based on the performance in the fourth quarter of 2021, and 16.8 million options based on the performance in the first quarter of 2022.

In other words, even if Musk sells 10% of Tesla shares as promised, he will end up holding more Tesla stocks after exercising the options.

Or play a more aggressive role

Driving Twitter reform

There is also an opinion that Musk may drive changes in Twitter. CSI All Share Investment Banking & analyst Daniel Ives of Wedbush Securities said: "We expect Musk's stake this time is just the beginning of broader discussions with Twitter's board and management, and ultimately he may play a more aggressive role." Some analysts believe that "this could ultimately lead to some form of acquisition."

Elon Musk has over 80 million fans on Twitter, often expressing various opinions, and is one of the most followed figures.

On March 25 local time, Musk initiated an online poll on Twitter, writing: "Freedom of speech is crucial to a functioning democratic country. Do you think Twitter strictly adheres to this principle?"

On March 27 local time, Musk retweeted the poll tweet, at that time the voting results showed that less than 30% of netizens believed Twitter adhered to the principle of freedom of speech. Musk believes that users should be allowed to choose the algorithms they see in tweets or create their own algorithms, instead of relying on Twitter to manage tweets. He wrote on Twitter, "Do we need a new (social media platform)?" The media interpreted this as him seriously considering creating a new social platform.

The SEC filing where Musk became the largest single shareholder of Tesla was submitted on March 14. In other words, Musk had bought a large amount of Twitter stock 10 days before initiating the poll.

White House Press Secretary Psaki commented on Musk's purchase of Twitter shares, saying, "Hope we can continue using Twitter."

According to China Fund Inc, on March 22, the U.S. Securities and Exchange Commission (SEC) stated in a submitted document that Musk's attempt to overturn the 2018 court agreement requiring pre-approval for his tweets was invalid.

In 2018, Musk had considered privatizing Tesla in a tweet, SEC later accused Musk of intending to mislead investors. Eventually, they reached a settlement requiring Musk to obtain approval from Tesla's lawyers before posting certain tweets. Musk is seeking to terminate SEC's oversight of his tweets, claiming that the 2018 settlement "tramples" his freedom of speech. He is also asking the court to block SEC from issuing subpoenas regarding the review of his tweet content.

On April 4, after buying Twitter shares, Musk initiated another poll: "Do you want an 'edit' button?"

As of the time of publication, 157,820 votes have been received, with 76.8% of voters choosing 'approve' (yes), and 23.2% choosing 'disapprove' (no).

Musk deliberately misspelled 'yes' and 'no' as 'yse' and 'on', seemingly implying that Twitter does indeed need an editing feature.
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