Money and Markets

Elon Musk made extra $156 million from his Twitter investment by failing to disclose his stake earlier

Business Insider US
Elon Musk at the Tesla Grünheide site in May 2021. Christophe Gateau/picture alliance via Getty Images
Elon Musk at the Tesla Grünheide site in May 2021. Christophe Gateau/picture alliance via Getty Images
  • Tesla CEO Elon Musk recently disclosed that he purchased a 9.2% stake in Twitter.
  • The company's stock shot up as a result of the disclosure.
  • But Musk was legally required to disclose his stake earlier — an error that potentially made him over $150 million richer.
  • For more stories go to www.BusinessInsider.co.za.

For the first several months of 2022, billionaire Tesla CEO Elon Musk was quietly buying up a nearly 10% stake in Twitter.

Between January and April, Musk spent $2.64 billion on Twitter stock — a fact he disclosed to the Securities and Exchange Commission on Monday, April 4.

That disclosure to the SEC was 11 days overdue, according to a new Washington Post report, and Musk potentially earned upwards of $156 million in stock value as a result of the late filing.

That's because the disclosure that Musk is now Twitter's largest single shareholder sent the company's stock price skyrocketing

Google
Google

After Musk revealed his investment, Twitter's stock price leapt by 31%. 

Had he disclosed his investment according to SEC guidelines, which require a disclosure when a shareholder accumulates more than 5% of a company's stock, the remaining 4.1% he purchased would've cost a lot more money: Approximately $156 million more, according to legal and securities experts speaking with the Washington Post.

That's assuming that the stock price would've risen by the same amount had Musk disclosed his investment earlier, and that Musk would've purchased the same overall amount of Twitter stock.

Musk could face a fine from the SEC, but it's unlikely to come anywhere close to the $156 million he earned by not disclosing his investment earlier, experts told the Washington Post.

Beyond the investment, Musk is joining Twitter's board of directors.

He's to begin serving as soon as is bureaucratically possible (following a background check and other formalities), with a term expiring in 2024, it said. As part of the conditions of his appointment, Musk isn't allowed to "become the beneficial owner of more than 14.9% of the company's common stock outstanding at such time" — which is to say that, while he serves on the board and for 90 days following, he isn't allowed to take a stake in Twitter larger than 14.9%.

Musk is a longtime Twitter user, where he's often used his account to share memes, Tesla news, crude jokes, and even to criticise Twitter itself. It's also landed him in hot water with regulators. 

SEC representatives didn't respond to a request for comment as of publishing.


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