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Elon Musk buys minority stake in Twitter – CBC News

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Tesla boss Elon Musk revealed a 9.2 per cent stake in Twitter Inc. on Monday, prompting a massive run up in shares of the company that he is now the largest owner of.

The disclosure comes close on the heels of his tweet that he was giving a “serious thought” to building a new social media platform, while questioning Twitter’s commitment to free speech.

A filing showed that Musk owns 73.5 million Twitter shares, which were worth roughly $2.9 billion US based on the $39.31 share price when the stock market closed on Friday.

On Monday morning, the price of Twitter shares rocketed up on the news to more than $48, pushing Musk’s stake up in the process.

A prolific Twitter user, Musk has over 80 million followers since joining the site in 2009, and has used the platform to make several announcements, including teasing that he was going to take Tesla private at $420 a share.

No such deal was in the works, which is why securities regulators have tried to crack down on the billionaire ever since. In October of 2018, Musk and Tesla agreed to pay $40 million in civil fines and for Musk to have his tweets approved by a corporate lawyer because of that saga.

But his lawyers are now fighting to have that deal torn up.

Last month, Musk asked U.S. District Court Judge Alison Nathan to nullify the settlement agreement. His lawyer, Alex Spiro, said the SEC has used the court agreement “to trample on Mr. Musk’s First Amendment rights and to impose prior restraints on his speech.”

As part of that court battle, the SEC has revealed it is also probing a Musk tweet from last November in which he asked his followers if he should sell 10 per cent of his Tesla stock to pay his taxes.

Questions about Twitter’s future

Musk’s minority stake in Twitter is already raising questions about whether he will buy more of the company, or push for changes.

“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 wrote in a note.

While news of the deal sent the value of the company skyward, some analysts say the move could be more trouble than it’s worth for Twitter.

The company was targeted by activist shareholders Elliot Management Corp. last year because they didn’t like that Jack Dorsey was CEO of Twitter but also of payment firm Square. The shareholders argued that one person couldn’t fully do both jobs at once, and that Twitter was suffering because of it. 

Elliot Management seemingly won that fight when Dorsey resigned as CEO of Twitter last year.

News that Musk is now taking a stake in the company could bring similar headaches, especially if he tries to buy the whole company, or push for changes there.

“Though we don’t expect the company to be taken private in the near term, this could present a challenge for new CEO Parag Agrawal, who has focused on new products to aid monetization,” Bloomberg Intelligence analyst Mandeep Singh said. 

“Musk’s suggestions could be at odds with activists Elliott and Silver Lake, which are more focused on improving operations and free cash flow.”

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Netflix’s subscriber growth slows as gains from password-sharing crackdown subside

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Netflix on Thursday reported that its subscriber growth slowed dramatically during the summer, a sign the huge gains from the video-streaming service’s crackdown on freeloading viewers is tapering off.

The 5.1 million subscribers that Netflix added during the July-September period represented a 42% decline from the total gained during the same time last year. Even so, the company’s revenue and profit rose at a faster pace than analysts had projected, according to FactSet Research.

Netflix ended September with 282.7 million worldwide subscribers — far more than any other streaming service.

The Los Gatos, California, company earned $2.36 billion, or $5.40 per share, a 41% increase from the same time last year. Revenue climbed 15% from a year ago to $9.82 billion. Netflix management predicted the company’s revenue will rise at the same 15% year-over-year pace during the October-December period, slightly than better than analysts have been expecting.

The strong financial performance in the past quarter coupled with the upbeat forecast eclipsed any worries about slowing subscriber growth. Netflix’s stock price surged nearly 4% in extended trading after the numbers came out, building upon a more than 40% increase in the company’s shares so far this year.

The past quarter’s subscriber gains were the lowest posted in any three-month period since the beginning of last year. That drop-off indicates Netflix is shifting to a new phase after reaping the benefits from a ban on the once-rampant practice of sharing account passwords that enabled an estimated 100 million people watch its popular service without paying for it.

The crackdown, triggered by a rare loss of subscribers coming out of the pandemic in 2022, helped Netflix add 57 million subscribers from June 2022 through this June — an average of more than 7 million per quarter, while many of its industry rivals have been struggling as households curbed their discretionary spending.

Netflix’s gains also were propelled by a low-priced version of its service that included commercials for the first time in its history. The company still is only getting a small fraction of its revenue from the 2-year-old advertising push, but Netflix is intensifying its focus on that segment of its business to help boost its profits.

In a letter to shareholder, Netflix reiterated previous cautionary notes about its expansion into advertising, though the low-priced option including commercials has become its fastest growing segment.

“We have much more work to do improving our offering for advertisers, which will be a priority over the next few years,” Netflix management wrote in the letter.

As part of its evolution, Netflix has been increasingly supplementing its lineup of scripted TV series and movies with live programming, such as a Labor Day spectacle featuring renowned glutton Joey Chestnut setting a world record for gorging on hot dogs in a showdown with his longtime nemesis Takeru Kobayashi.

Netflix will be trying to attract more viewer during the current quarter with a Nov. 15 fight pitting former heavyweight champion Mike Tyson against Jake Paul, a YouTube sensation turned boxer, and two National Football League games on Christmas Day.

The Canadian Press. All rights reserved.

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