Market Rebellion TV
← Back to News

Trading Insights

Elon Musk’s Twitter Takeover

Elon Musk disclosed Monday that he has acquired a 9.2% stake in the social media company, making him the largest single-shareholder by far. Perhaps the most influential Twitter user on Earth, Elon Musk, shook up the world of social media in a big way with his $2.9 billion dollar purchase of Twitter stock. That makes […]

By Market Rebellion · April 4, 2022
Elon Musk’s Twitter Takeover

Elon Musk disclosed Monday that he has acquired a 9.2% stake in the social media company, making him the largest single-shareholder by far.

Perhaps the most influential Twitter user on Earth, Elon Musk, shook up the world of social media in a big way with his $2.9 billion dollar purchase of Twitter stock. That makes Musk the largest individual shareholder of the company by far — with a stake more than four-times that of founder Jack Dorsey. 

This comes after Musk has become critical of Twitter’s censorship. Twitter has been accused by many, including Musk and former president Donald Trump, of censoring conservative opinions. On March 25th (prior to disclosing the purchase), the Tesla CEO created a poll to ask if the Twitter-public agreed with his view.

This is not the first time Elon has used a Twitter poll to make a massive financial decision. Last November, Elon used a similar poll to ask users whether he should sell 10% of his Tesla stock holding. Twitter users voted yes, and Elon followed through with his promise — temporarily sinking Tesla’s stock price in the process. 

The results

An hour after posting his latest poll, Elon warned users, “The consequences of this poll will be important. Please vote carefully.” 

After more than 2 million votes, the answer was in — a resounding no. More than 1.4 million users said that they believed Twitter did not rigorously adhere to protecting free speech.

Elon followed the poll result with another question, asking Twitter users, “What should be done?”

One popular FinTwit user responded, “Why don’t you just buy it?” 

By Monday morning, it seemed that Elon had taken the users advice.

Impact on the stock

The results didn’t have an immediate impact on the stock, which traded in a <1% range throughout the rest of the day. 

The results did however have an immediate impact on the options market. Market Rebellion spotted this piece of unusual options activity after the poll had closed, in which a trader spent 1,573,000 on these far out of the money calls. 

Elon Musk's Twitter Takeover - UOA

This trade foreshadowed intense price action. On April 4th, the day that Elon revealed his stake in the company, shares of the social media giant soared. At the time of writing, those shares were up more than 26.5% on the day, trading as high as $50.00. That’s the highest Twitter has traded since November of 2021. 

A frenzy in the options market

Call buyers were rewarded handsomely. Those calls from the unusual options purchase above are currently worth $10,660,000 — more than 6-times the original purchase price. This is why Unusual Options Activity is so important for traders to follow. And the massive purchases haven’t stopped yet. 

The April 8th, $50 strike call options (4DTE) had already surpassed a daily volume of 150,000 contracts traded, setting a single-contract options volume record for Twitter in less than half of a trading day.

Traders have continued confidently into more out of the money option purchases, with one buyer purchasing 5,068 $55 strike calls expiring this week — worth a grand total of $516,936. 

What’s next for Elon Musk and Twitter?

Though this move makes Elon the largest single shareholder at Twitter, more action is likely needed in order to create real change in the social media giant. At least, according to analyst Rich Greenfield (Partner at LightShed Partners). “The 9% stake does not give Musk enough power to change the way the company is run in terms of censorship.”, he said on Monday.

But Musk’s pockets are deep, and he has shown before that he’s willing to put his money where his mouth is. If his prior tweet is to be believed, and “the consequences of this poll will be important,” then this is likely not the last that we’ll hear of Elon’s attempts to impact the way that Twitter handles censorship.

4/05 EDIT: It begins.