Tesla and SpaceX CEO Elon Musk showed up here in 2020, bought a 9.2% stake in Twitter.
Susan Walsh / AP
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Susan Walsh / AP
Tesla and SpaceX CEO Elon Musk showed up here in 2020, bought a 9.2% stake in Twitter.
Susan Walsh / AP
Tesla CEO Elon Musk took a 9% stake in Twitter to become its largest shareholder after raising questions about the social media platform’s dedication to free speech.
The ultimate purpose of Musk’s $2.9 billion purchase of 73.5 million shares, based on Friday’s closing price, is unclear. However, in recent weeks, Musk, who has 80 million followers and posts on Twitter regularly, has questioned freedom of speech on twitter and whether the platform has undermining democracy.
Monday’s regulatory filing describes Musk as a long-term investor looking to minimize the buying and selling of his stock.
He has also considered starting a rival social network, and industry analysts are skeptical about whether the nimble CEO will remain on the sidelines for long.
Wedbush Securities’ Dan Ives said: “We expect this passive stake to be just the start of broader conversations with Twitter’s board/management that could eventually lead to an active stake. and Twitter’s potentially more active ownership role,” Wedbush Securities’ Dan Ives said in a client note early Monday.
Shares of Twitter were up 20% before the opening bell on Monday.
Musk told his more than 80 million Twitter followers that he ” give serious thought “to create its own social media platform and has repeatedly clashed with financial regulators over its use of Twitter.
His Twitter stock purchase happened when Musk was locked in fierce dispute with US securities regulators about his ability to post on Twitter. Musk’s lawyers have argued in court that the US Securities and Exchange Commission is infringing on the Tesla CEO’s executive power Right of First Amendment.
In October 2018, Musk and Tesla agreed to pay $40 million in civil penalties and have his tweets approved by company attorneys after he tweeted about having the funds to take Tesla private with price $420/share.
Funding is far from secure and the electric-car company remains public, but Tesla’s stock price has skyrocketed. The settlement outlined governance changes, including Musk’s resignation as chairman of the board, as well as pre-approval of his tweets. The SEC has filed securities fraud charges, alleging that Musk is manipulating stock prices with his posts.
Musk’s attorney is now asking a U.S. District Court judge in Manhattan to rescind the agreement, alleging that the SEC is harassing him and violating his First Amendment rights.
In early March, Musk asked Judge Alison Nathan to cancel the SEC’s subpoena and cancel the settlement. His attorney, Alex Spiro, said the SEC used the court settlement to “trample on Musk’s First Amendment rights and impose previous restrictions on his speech.” .”
The SEC responded in a court motion, saying it had legal authority to subpoena Tesla and Musk for his tweets, and that Musk’s move to rescind the settlement was invalid.
The SEC revealed that it is investigating Musk’s November 6, 2021 tweets asking followers if he should sell 10% its Tesla shares. The commission confirmed that it issued an administrative subpoena while investigating whether Musk and Tesla complied with the disclosure controls in the 2018 agreement.
The commission is also investigating whether Tesla accurately described in its public filings with the agency whether it complied with the controls.
The committee asserted that the subpoenas were lawful and that Musk did not follow proper legal process to challenge them. SEC attorney Melissa Armstrong called Musk’s challenge “frivolous” and pointed out that Musk and Tesla had agreed to have his tweets pre-approved by other company officials.
“The courts have long recognized that ‘congress has given the SEC broad authority to conduct investigations into possible violations of federal securities laws and to request evidence in connection with the law’. in connection with such investigations’,” Armstrong wrote.
The subpoenas, issued under seal, come from the commission’s official order authorizing the investigation. They searched all written communications regarding the November 6 tweets and whether they were shown to Tesla’s attorneys for pre-approval.
Musk’s attorney Spiro has requested verbal arguments in the case.
Musk’s disclosure of his stake in Twitter stock comes two days after Tesla Inc. announced first quarter business results delivery number. While the company delivered 310,000 vehicles during the period, this number was slightly lower than expected.
Shortly after tweets in November about the Tesla stock sale, Musk began selling off the stock, and he wrote on Twitter that the sale would go to pay tax on the stock options. Analysts estimate his tax liability at $10 billion to $15 billion. But some of the money could have been used to buy shares of Twitter.
To date, he has sold more than 15 million shares worth about $16.4 billion. With some sales by the end of December, Musk is close to selling 10%.
