Shares of Twitter soared today, jumping 7% after it was announced that Tesla CEO Elon Musk’s venture capital firm, known as Technokey, had purchased a significant stake in Twitter.
The stock ran up 20.1% in early morning trading, putting it on track for its highest close since November. It is on track for the biggest one-day percentage gain since it ran up 21.4%. The full day average was about 18 million shares.
In a Schedule 13G filing with the Securities and Exchange Commission, which implies a passive stake, Tesla Inc. TSLA, +4.08% Founder Musk had acquired 73.49 million shares of Twitter, or 9.2% of the shares outstanding.
At the close on Friday, the shares of Twitter were trading at $36.
If the value of that stake increases to its estimated value, the stake would be worth about $3.47 billion.
Twitter’s stock has now gained 9.3% year to date, and was trading 45.7% above its 20-month closing low of $32.42 on March 7. Musk’s investment comes as Twitter’s stock has started to recover recently after a tough 2021, relative to its peer group and the broader stock market. And in 2021, Twitter shares had tumbled 20.2% while the SPDR Communications Services Select Sector exchange-traded fund XLC, +2.24% rallied 15.1% and the S&P 500 index SPX, +0.43% had run up 26.9%.
According to the billionaires index, Musk is the world’s richest person with a total net worth of $273 billion, as his company’s stock has gained 3.8% so far this year.
Tom Siomades, chief investment officer at AE Wealth Management, says investors today are mostly emotional rather than non-emotional.
“Musk is an extension of that, he feels that Twitter is infringing on free speech, and he probably wants to have an impact,” Siomades said. “He will use his money, power and prestige to exact change at the company.”
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