Twitter: Insiders, Titans & Tantrums
There’s nothing quite like enhanced and busy ‘Traded Option’ activity to herald [insider trading] price-sensitive information on forthcoming corporate news.
Lo and behold, it was in late March 2022, and in the days preceding Elon Musk’s notification of a substantial interest, Twitter futures contracts suddenly started moving higher in above-average daily volume.
No doubt, as of writing, the SEC will be scrutinizing the trades and beneficiaries with a view to possible prosecutions.
On Monday, April 4th, Elon Musk notified the SEC and the Twitter [TWTR] Board of directors of his sizeable shareholding. As a consequence, the shares jumped 27% to $50.
Notwithstanding the inflated egos of titans, Elon Musk is now TWTR’s largest single shareholder, dwarfing founder Jack Dorsey’s stake of 2.25%. While they have aligning views on cryptocurrencies, that would seem to be where any similarity ends. Musk is an outspoken champion of free speech and seems determinedly against the cancel culture that Dorsey has practiced, most notably banning ex-President Trump.
It’s now confirmed that Elon Musk slowly bought his 73.5 million shares bit by bit, day by day, over more than two months that began on January 31st. He paid approximately $2.9 billion for a 9.2% stake in Twitter. His largest daily purchase occurred on February 7, when he bought 4.8 million shares at a cost of approximately $176 million.
More problematically, SEC rules may have been broken in the delay of announcements as shareholding thresholds may have been breached as he accumulated such a significant stake.
A champion of free speech and sometimes questionable opinions, Elon tweeted on March 24th that he was “worried about de facto bias in the TWTR algorithm having a major effect [adverse] on public discourse.”
A day later, he again tweeted, “free speech is essential to a functioning democracy,” and polled his 80 million-plus followers whether or not they agreed that TWTR rigorously adhered to this principle: 70.4 % did not.
Elon’s substantial business arrangements and relationships with the CCP and China could present something of a quandary for his very public opinions. Still, not to be deterred, he continued by asking, “What should be done?”
The 12-member board of Twitter didn’t wait to find out.
They invited him ABOARD almost immediately on the following day [Tuesday, April 6th] as Musk declared his investment was not passive. He further intimated that he aims to make significant changes [improvement] in the coming months.
Parag Agrawal, CEO of TWTR, is under no illusions. While inviting Musk to the 12-member Board, he declared, ‘He will be of value both as a passionate believer and intense critic of the social network.’ Even Jack Dorsey, who nominally retires from the board on May 25th, was moved to opine, ‘I’m really happy Elon is joining TWTR board. He cares deeply about our world and Twitter’s role in it.”
Other Twitter patrons and commentators were not so welcoming or enthusiastic, particularly a significant core of Woke Warriors, who fear dramatic changes in a company under Musk’s influence.