Analysts react to Musk's big Twitter stake: He could do 'almost anything' so 'use your imagination'

Published Mon, Apr 4 202210:38 AM EDT

Elon Musk's move to build an eye-popping stake in Twitter and become its biggest shareholder is sparking speculation that the social-media personality could take more action to shake up the company. Here's what analysts and investors think about Musk's bold move. Musk has taken a 9.2% passive stake in the company, worth $2.89 billion, according to a filing released Monday. The purchase came just weeks after the Tesla CEO polled his 80-plus million Twitter followers about if the social media platform adheres to free speech principles. Musk also recently hinted at starting his own. While for now Musk's holding is below the key 10% active threshold, many believe this is just a beginning of a more controlling and aggressive stake in the social media company, or even a takeover down the road. "It looks like Elon has his eyes laser set on Twitter and we would expect this passive stake as just the start of broader conversations with the Twitter board/management that could ultimately lead to an active stake and a potential more aggressive ownership role of Twitter," Wedbush analyst Dan Ives said in a note. Don Bilson, head of event-driven research at Gordon Haskett, highlighted Musk's connection with private equity firm Silver Lake, which advised him on his 2018 Tesla take-private deal that was ultimately scrapped. Bilson, who has a knack for sniffing out deals from alternative data, pointed out that Silver Lake's co-CEO Egon Durban is a Twitter director. "Unlikely a 'passive' stake," Bilson said in a note. "We don't think anyone should sleep on the idea that Musk and Silver Lake might take TWTR private. After all, Musk isn't here to make $500m or $1bn or $2bn. Nor does he figure to remain passive...Musk is a threat to do almost anything at TWTR so use your imagination." Twitter has never had a controlling shareholder and Musk's move is a reminder to investors that a takeover is a possibility especially given the recent weakness in the stock, said Rich Greenfield, general partner at LightShed Ventures. "I don't know if it's truly passive or not," Greenfield said on CNBC's "Squawk Box" Monday. "It underscores for investors that Twitter could be acquired I think given the weakness you see as investors have given up on so many tech stocks across this universe." Twitter and Musk did not yet return a CNBC request to comment. 'Is a new platform needed?' Perhaps in hindsight, Elon's move isn't all that jaw-dropping considering his recent thoughts about Twitter — ways to have less censorship, less algorithmic bias and possibly going open source. For instance on March 26, he posed a question about what should be done to address Twitter's censorship issue. Meanwhile, his comments leading up to his stake had been about considering shaking up the social media giant and changes to be made. "Is a new platform needed?" Musk replied in the thread. Some say even if Musk remains a passive shareholder, he could make a material impact at the social media company given his massive following and influence. "If there was ever a 'passive' holder who would, via his following, agitate for change, I would think it's Elon Musk," Bank of America's trading desk said in a note. — CNBC's Michael Bloom contributed reporting.

Tesla CEO Elon Musk during the official opening of the new Tesla electric car manufacturing plant on March 22, 2022 near Gruenheide, Germany.

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Elon Musk's move to build an eye-popping stake in Twitter and become its biggest shareholder is sparking speculation that the social-media personality could take more action to shake up the company.

Here's what analysts and investors think about Musk's bold move.