Background Information on Elon Musk and Twitter
Elon Musk is a South African-born Canadian American entrepreneur, engineer, and technology investor. His career spans multiple industries, ranging from entrepreneurship and engineering to innovative technology projects. He is the founder of several companies, most notably Tesla – the electric car manufacturer, SolarCity – the solar panel installer, and SpaceX, an aerospace technology and rocket manufacturing company. Musk also consistently tweets regularly on his verified Twitter account and is arguably one of the most influential personalities on the platform. Musk has a sizable following on Twitter, with over 42 million followers, as of August 2020.
Relevant Data on the Ownership of Twitter
Twitter is a public company currently owned by shareholders who own portions of the company largely through the ownership of common stock. According to reports from Statista, as of late 2020, the leading shareholder of Twitter is venture capital firm Rizvi Traverse Management LLC, with 13.7% ownership of the company. This is followed by mutual fund company Vanguard Group Inc with 6.6% of ownership and JP Morgan Chase & Co as the third largest shareholder, owning 5.4% of the company. Elon Musk does not currently own any major percentage of Twitter’s stock.
Expert Perspective on Musk’s Ownership of Twitter
Experts have conflicting perspectives on the potential of Elon Musk owning considerable shares in Twitter. Some argue that Musk’s presence and influence on the platform has been significant, and that the pioneering technology entrepreneur could catalyse great changes to the company if it were to come under his ownership. Others argue that Musk is likely to focus on his companies, such as Tesla and SpaceX, before expanding his interests to include other industries. Financial experts argue that due to the amount of capital needed to purchase a large portion of the company – and attributable to Musk’s financial commitments to other companies – a purchase is unlikely to happen.
Analysing the Potential for Musk’s Twitter Ownership
Given the public availability of Twitter stock, the purchase of a major portion of the company is possible, depending on the availability of funds and the interests of the investor. As a technology pioneer, it is likely that Elon Musk could be a major driving force for change within the company; as a fiery character in the tech world, and an advocate for progress, he could inspire shifts away from the current structures of the tech giant and drive strategies for change. However, considering the vast financial commitments Musk has to his other companies, a major purchase of Twitter stock appears to be out of his current financial reach.
Influence of Elon Musk on Twitter’s Platform
Whether or not he owns large stakes in the company, it’s clear that Elon Musk has a considerable influence on Twitter’s platform. His tweets often go viral, and he has made numerous announcements regarding his own companies through Twitter. His tweets have been known to heavily influence the stock market, with analysts citing his tweets in investment decisions. Further, he has used his account to raise awareness on important issues, such as the environment, diversity, and even the coronavirus pandemic. Given his sizeable following and reach, it is not hard to imagine that his influence on Twitter’s platform will remain for some time to come.
Tax Implications of a Potential Twitter Purchase by Elon Musk
Any purchase of a large portion of public stock by Musk would also heavily involve taxation implications. In the US, for example, capital gains tax must be paid upon the profits of any sale, as well as other taxes on certain investments. Taxation must be planned ahead of the purchase, in order to avoid potential fines or penalties down the line. It is likely that Musk’s team have analysed the potential of him purchasing Twitter and an assessment of the tax implications would have been taken into consideration.
Timing of a Tweet by Elon Musk and its Effect on Stock Prices
An interesting phenomenon observed in the stock market is Musk’s ability to heavily influence stock prices with just a tweet. Reports have indicated that immediately after a tweet by Musk, stocks may rise or fall by up to 8%, inducing large shifts in stock prices in short periods of time. Such is the influence he has on the market – a mere tweet can be enough to cause fluctuations in stock index levels. While it brings attention to his ventures and the companies he owns, it also has the potential to hugely disadvantage small traders who are not able to respond to such volatile stock prices in the short time-frame.
Litigation Involving Elon Musk and Twitter
As Musk is one of the most recognizable faces in the tech industry, the potential of an acquisition of Twitter becoming a reality has caused a lot of speculation. In the past, Musk has been involved in a number of litigation cases alongside Twitter, especially regarding his tweets and the promotion of his own companies. Most of these cases have been resolved favorably, as Musk was able to successfully validate the substance of his tweets. Nonetheless, such cases highlight the risks of Musk engaging in any ownership of Twitter without careful consideration of the implications of his tweets.
Potential Opposition to a Twitter Purchase by Elon Musk
Considering Musk’s dominant presence in the tech industry, a potential purchase of Twitter’s stock by him could be met with opposition from various sources. For one, Elon Musk’s main rivals in the tech world may use the opportunity to avoid a potential influencing stake by the visionary entrepreneur. Similarly, shareholders who currently have large portions of Twitter’s stock may be hesitant to surrender their ownership to Musk. It is also likely that the federal government – with its focus on antitrust matters – would keep a close eye on any potential purchase by Musk. Finally, the possible mismanagement of funds – and potential abuse of securities regulations by Musk – could serve as a major block to any potential purchase.
