Musk's influence on Reddit, the home base of retail investors in the United States, is comparable to Buffett's, and whenever he mentions an asset, other investors will rush to buy it.
According to Barron's April 6 report, Musk re-disclosed his shareholding in the social media platform Twitter (TWTR) to the U.S. Securities and Exchange Commission (SEC) on April 5, replacing the 13G form he submitted on April 4, which is generally used for passive investment, to form 13D for investors who will participate in relevant corporate governance.
That means Musk went from being a passive investor on Twitter to an active investor, meaning he intends to be more actively involved in Twitter's business.
Twitter said in a filing with the SEC on April 5 that Musk will serve on the company's board of directors for a term ending at the company's 2024 annual general meeting.
The documents show that during his tenure on Twitter's board and for 90 days after his term ends, Musk was not allowed to hold more than 14.9 percent of Twitter's stock, either alone or as a team member. According to Musk's latest filing of 13D documents, he currently holds 9.1% of Twitter shares, down from the 9.2% disclosed on the 4th. It's almost Twitter co-founder Jack 4 times the 2.3% stake held by Dorsey.
After the news of Musk becoming Twitter's majority shareholder was announced on April 4, the company's stock price soared 27%, the largest one-day increase since the listing, and rose another 2.02% to $50.98 on the 5th. Before market hours on Wednesday, April 6, Twitter fell 0.6%.
Daniel Ives, an analyst at Wedbush, said: "The big stake in Twitter is clearly just the beginning of Musk's involvement in the company, and we believe that Musk's joining the board will bring a series of short- and long-term strategic initiatives to Twitter, which is still struggling with the social media competition." ”
Musk tweeted on April 5: "Looking forward to bringing significant improvements to Twitter in the coming months by working with Parag and The Twitter Board!" ”
Barron's believes that as the largest shareholder and board member, Musk may exert a lot of influence over Twitter's business. In the past, Musk has criticized Twitter's restrictions on user speech, which has led some to believe that he may be trying to influence the company's policy on speech restrictions. For now, investor reactions to the news have been positive.
1
Musk is Buffett in the eyes of retail investors, want to fly with Twitter?
Twitter has maintained its position as the world's leading real-time commenting platform, but the gap between the company's public influence and performance has hit the confidence of some "iron-hating" investors. After activist investment firms Elliott Management and Silver Lake Partners took stakes in Twitter, the company's stock price rose from $15 to $45 and peaked at $77 in February 2021, but Twitter's stock has been falling since Dorsey stepped down as CEO at the end of 2021, this time to $31 before Musk's buying rally.
Analysts at Bespoke Investment Group said: "Twitter has long been criticized for failing to reach its full potential, and those who hold shares in the company clearly want Musk to push the company in this direction." ”
Musk's influence on Reddit, the home base of retail investors in the United States, is comparable to Buffett, as long as he mentions an asset, other investors will rush to buy, this time he has invested in Twitter with his own money, driving a large number of investors to buy.
In January this year, Musk tweeted that "some of the goods on the Tesla Mall can now be purchased with Dogecoin," and Dogecoin rose by 13%. He also recommended the use of the instant messaging app Signal on Twitter, and over the next three days, another unrelated and little-known low-priced stock, Signal Advance, soared more than 6,000 percent.
Twitter CEO Agrawal announced a $4 billion share buyback program in February, and Barron's noted that the aggressive buyback program was for stock market losers. It makes sense to make a massive share buyback when Twitter's stock price falls as it did before, and now that the stock price has risen, Agrawall should find a way to quietly retract the plan and wait to see what happens next.
MKM Partners analyst Rohit Kulkarni is "excited and curious" about musk's possible positive role at the company, but he believes that the near-term risk and reward calculations for the company's stock are "fairly balanced at current levels." On April 5, he downgraded the company's stock from "buy" to "neutral, but maintained its $49 target.
Bank of America Securities' Justin Post insisted on Twitter's "buy" rating, saying the expected P/E ratio of 5.5 times was attractive. "While Musk's acquisition may not bring any changes to execution and performance, this news does highlight the value of the platform to potential acquirers, or those who believe Twitter can get more value through change."
2
From passive holding to active investment, Musk wants to do things?
Musk's disclosure of his shareholding information on Monday was a 13G filing filed by passively held investors, and he now joins Twitter's board of directors, so he uses 13D filings from people with influence on corporate governance and decision-making, such as active investors, executives and directors.
Musk, a deep Twitter user, has repeatedly expressed dissatisfaction with Twitter's restrictions on user speech, and Barron's magazine pointed out that Musk may exert greater influence after becoming an active investor.
Musk's vote on whether users want to edit the button on Twitter on April 4 received a majority of votes in favor, and Twitter said on the 5th that the company is developing an editing function for Tweets and will test this feature in the coming months in its paid service Twitter Blue, but said it did not get this idea from the vote initiated by Musk.
In recent weeks, Musk has publicly said he is considering whether he should create his own social media platform, and Barron's noted that Musk's joining Twitter's board may be a step toward that goal.
Cathie Wood, CEO of Ark Investments, one of Tesla's major shareholders, said in an interview with Bloomberg Radio that Musk's investment in Twitter could lay the groundwork for a management reshuffle at the company. Agrawall only took over as CEO from founder Dorsey a few months ago. Wood said this could be a "strong signal" to the new CEO.
In addition, after Musk became Twitter's largest shareholder, there were some calls for Musk to restore the Twitter account of former US President Trump. But Twitter announced Musk's joining the board of directors at the same time that Musk has no right to change the platform's current review and ban mechanism, nor to restore the banned accounts.
3
Wall Street worries that Musk is not doing his job
Gary Black, portfolio manager at Future Fund Active ETF (FFND), said: "I don't understand Musk's recent investment in Twitter, and the worst consequence may be that Musk is distracted by Twitter and loses focus on things that should be focused." "Tesla is the company with the most weight in this ETF.
But there are people who don't worry about this, Ross Gerber, CEO of Gerber Kawasaki, told Barron's: "I think he copes with it, joining Twitter's board doesn't take musk too much time, and he can bring benefits to Twitter." ”
Pierre Ferragu, an analyst at New Street Research, agrees. One of Musk's biggest strengths, Ferragu believes, is "devolving power to talent who works for Tesla," which includes two direct musk subordinates, head of engineering Andrew Baglino and CFO Zachary Kirkhorn, both of whom regularly attend investor events and earnings conference calls.
Morgan Stanley analyst Adam Jonas believes that Musk's joining Twitter's board is a positive for Tesla, noting that Musk's ability to win broad public support for his vision is crucial to Tesla's success, and Twitter can help him do just that.
In a research report released on Tuesday, Jonas said: "Over time, platforms such as Twitter are likely to become increasingly strategic to Tesla. ”
According to the latest Forbes billionaire list, Musk has now surpassed Amazon (AMZN) founder Bezos to become the world's richest man with a value of $219 billion, and the relevant data did not include Twitter shares as of March 11. What helped Musk to the top of the rich list was mainly the rise in Tesla's stock price, which has risen by 57.78% in the past 12 months.
Wen | Contributor to the Chinese edition of Barron's Magazine Guo Liqun
Edit | Kang Juan
Copyright Notice:
Original barronschina articles, not reproduced without permission.
(This article is for your informational purposes only and does not constitute the provision or reliance of investment, accounting, legal or tax advice.) ）
Add stars and don't get lost
Dots, likes and looks are all here!