What's up guys and welcome back to wall street millennial on this channel, we cover everything related to stocks and investing. Since this past friday april, 1st twitter's share price has skyrocketed 30, making it what marked the best single day of performance in their entire history as a public company. They have one person to thank for this. Favorable share price performance, elon musk as techno king of tesla musk, is perhaps the most influential man in the world of business and technology.

His tweets and public statements have a long history of impacting share prices of stocks in cryptocurrencies, for example, in july of 2020. He catalyzed the epic dogecoin rally when he reposted a meme about the coin's inevitability, but the twitter news is much more serious than his usual antics. The stock started moving when he disclosed that he purchased 9.2 percent of the social media. Platform's outstanding shares for a total price of about three billion dollars.

Musk is now the single largest shareholder in the company for comparison, twitter, co-founder jack dorsey only owns two percent of the company. Now that he's the largest shareholder, the social media giant, gave him a seat at their board of directors. That means that he will have a significant degree of influence over the company's strategy and operating decisions. Musk has already made a pretty good return on the investment.

After a stake was revealed, his shares increased in value by almost 1 billion dollars, but that's little more than a rounding error compared to his 267 billion net worth elon musk has his reasons for buying such a big stake in twitter, but it has nothing to do With money in this video, we'll look at how much power musk will have over twitter and what his plans for are. We all know what twitter does it's a social media platform where people can tweet about news. The stock market celebrity gossip politics and whatever else they're interested in having conversations about in the increasingly digital world, twitter has become something of a public town square where everyone from around the world can share stories and debate with each other. On the surface it looks like twitter has been crushing it.

Their monetizable daily active users has more than doubled over the past five years, thanks to an acceleration of adoption during the pandemic. Currently, 217 million people use the platform on a daily basis. Despite the impressive user growth, their share price has significantly lacked their social media peers as well as the overall market. If you bought shares at their 2013 ipo, you would have been down slightly before elon musk revealed to stake.

This is because they have struggled to turn their user base into a profitable business. Over the past six years, they've only managed to report a positive net profit twice. The main problem with twitter is that they're not good. At monetization facebook's average revenue per daily active user was 59 in 2021 or more than double twitter's 23 dollars.

Zuckerberg is very good at mining as much data as possible from facebook users and surgically targeting ads to maximize their price per impression. Twitter is not nearly as sophisticated in this regard. One of the reasons that twitter fell so far behind facebook is because of founder and long time, ceo jack, dorsey's, lack of focus founding twitter turned dorsey into a household name, but over the years he appeared to grow bored of the company in 2009. He founded the payment processing company square square offers an affordable device which, for the first time, allowed small businesses to accept card payments.

The company was extremely successful and today its market cap is nearly double that of twitter. For many years, dorsey was concurrently. The ceo of both square and twitter, if you think leading a multi-billion dollar tech company to profitability, is hard, try doing it while multitasking as if all that wasn't enough he's also very involved in the bitcoin community, frequently attending bitcoin conferences and getting involved with various blockchain Related projects - square's business, is much more congruent with his interest in cryptocurrencies cash app, which is owned by square recently started supporting bitcoin transactions. Dorsey's obsession with bitcoin has reached the point of being almost religious on the cash app website he's created.

A short comic book called my first bitcoin, the legend of satoshi nakamoto. He even went so far as to legally change, square's name to block which is short for blockchain twitter's business model doesn't really have anything to do with crypto, so dorsey gradually lost interest and diverted more and more of his attention to square. He also gradually sold his stake so that now he only owns two percent of twitter, putting him not even in the top 10 shareholders. Dorsey's negligence was a major contributor to twitter's underperformance relative to facebook and other social media companies smelling blood in the water.

Hedge funds, including elliott, management and silverlake, bought shares in twitter in an attempt to force dorsey out in november of 2021. They finally achieved this goal. Dorsey stepped down as ceo and was replaced by long-time chief technology officer. Perog agrawal twitter shareholders hoped that this change of leadership could finally turn around the lagging stock phrase.

Unfortunately, perad gave disappointing guidance around expense, growth and the stock continued to drift downwards. The power vacuum left at twitter created an opening for musk to get involved. He pounced and built his 9.2 position within just a few months of dorsey's exit. The position cost him three billion dollars to buy the positive reaction on the stock price.

Already netted him one billion dollars of paper gains, but he's not doing it for the money he's worth 267 billion dollars, even if he can implement reforms to double the stock price. That would only increase his net worth by one percent. So it's frankly not worth his time, but if he's not doing it for money, then what are his motives with 80 million followers musk controls, the eighth most followed account on the entire platform. He tweets prolifically about tesla, spacex, cryptocurrencies and all types of random stuff.

A couple weeks before he announced his stake, musk put out a twitter poll. The poll asked if twitter rigorously adheres to free speech, principles of the 2 million votes. 70 said no. The next day he said that twitter serves as a de facto public town square and failing to adhere to free speech.

Principles could undermine democracy. In recent years, twitter has come under increasing scrutiny from republican pundits and politicians for a perceived censorship of right-wing views. Twitter denies this allegation and says that their policies are only to prevent hate speech and misinformation. This is not a political channel and we don't take a position on this issue, one way or the other, but based on musk's tweets.

It looks like censorship is a key concern for him. The single highest profile and controversial decision by twitter was to permanently ban the account of former u.s president donald trump. They claimed that his tweets could have incited violence around the january 6 insurrection. This was a controversial decision, given that trump was a sitting u.s, president of the united states.

At the time, twitter has had a long list of controversial account suspensions and even if you agree with their decisions, their internal controls are clearly not robust in an incredibly embarrassing incident from 2016, they accidentally suspended jack dorsey's account purely as a result of an algorithm glitch. While musk has not said so explicitly, it looks like he is concerned about twitter's moderation, policies and musk is not the only one concerned after his presidency ended donald trump founded the trump media and technology group. That company is planning to launch a competitor to twitter called truth, social, which the former president will be able to use to communicate with his supporters. In october of last year, trump's social media startup agreed to merge with a spec called dwac the share price skyrocketed and at the peak the implied valuation was 17 billion dollars.

Interestingly, when musk revealed his twitter stake, dwac's share price started free falling. At the exact same time that twitter started skyrocketing with elon musk on the board, he can potentially change their policies to address the concerns of conservatives. If this is the case, trump supporters may feel comfortable. Staying on twitter and they'll have no need to migrate to truth.

Social, but how much power will musk actually have with 9.2 percent of the outstanding shares? He is the single largest shareholder, but you need 51 to unilaterally make decisions and it does not appear that musk wants to do anything. Radical twitter voluntarily gave him a seat on the board of directors based on existing regulations. Board members are not allowed to own more than 15 percent of the outstanding shares. If he really wanted to, he could step down and buy as many shares as he likes.

He certainly has the money to do so, but it doesn't look like he'll go on that route. Musk is looking to have a constructive relationship with twitter's existing management team. Ceo parag agarwal said that he's excited to welcome musk onto the board and that musk will bring great value. Importantly, he said that musk has been both a passionate believer and intense critic of twitter and it's a good thing to have a critical opinion on the board.

So it looks like perak has an open mind and will work together with musk to address the concerns about content moderation on the platform. We're probably not going to see any radical changes on twitter anytime soon, but through his influence on the board, musk will probably try to steer the platform to a more libertarian direction. As far as the stock price is concerned, it's probably an overreaction to the upside musk is already the richest person in the world. Any increase in shareholder value at twitter would be a mere rounding error compared to his 20 stake in tesla, also from a business perspective.

Twitter's main problem is monetization, not user growth musk doesn't have any particular expertise in digital advertising. So there's probably not much. You can add on this front, alright, guys that wraps it up for this video. What do you think about musk's stake in twitter? Is it a good thing or will make the techno king too powerful? Let us know in the comments section below as always.

Thank you so much for watching and we'll see in the next one wall, street millennial signing out.