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Elon Musk just bought 9% of Twitter–here’s how much you’d have if you invested $1,000 five years ago

Twitter shares soared in Monday morning trading after filings revealed that Tesla CEO Elon Musk had purchased a 9.2% stake in the social network.

Musk’s 73,486,938 shares make him Twitter’s largest shareholder, and were valued by CNBC at $2.89 billion at Friday’s closing price — a fraction of the world’s richest man’s $273 billion fortune, according to Bloomberg.

Musk has for years been one of Twitter’s most famous users, with a follower base that is now over 80 million. His tweets have landed him in hot water in the past, including a 2019 defamation trial after he called a British cave explorer a “pedo guy.” Musk was found not liable.

In 2018, he was charged $20 million in fines by the Securities and Exchange Commission for “misleading investors with tweets,” CNBC reported. The run-in with the SEC also resulted in Musk needing to have some of his tweets screened by Tesla’s lawyers.

In recent weeks, Musk has criticized Twitter for “failing to adhere to free speech principles,” and has even said he was considering building a new social media platform.

It remains to be seen what impact, if any, Musk’s ownership will have on the social network. Musk’s ownership stake is passive, meaning that he is a regular stockholder and does not have any involvement with the operation of the company.

However, analysts liked Wedbush’s Dan Ives have speculated that he could eventually attempt “some sort of buyout.”

“This makes sense given what Musk has at least been talking about, at least from a social media perspective,” Ives said Monday on CNBC’s “Squawk Box.”

Musk’s acquisition immediately sent the social network’s stock spiking more than 20% Monday morning.

If you had invested $1,000 in Twitter five years ago on April 4, 2017, your investment would be up 236.7% as of Monday at 11:55 a.m., according to CNBC calculations, with a total market value of $3,366.92.

It would be worth less, however, if you had invested in Twitter at its 2013 IPO price of $26. The same $1,000 investment made on November 7, 2013 would be worth $1,902 as of Monday morning’s price of $49.46 — a return of 90.2%.

Over the same two time periods, the S&P 500 index grew by 93.7% and 161.7%, respectively.

Despite Twitter’s growth over the years and Musk’s recent involvement, past returns of an individual stock do not predict future results. Make sure to carefully research your options before investing.

And instead of trying to predict which stocks will go up and which will go down, consider buying low-cost index funds and holding onto them. This type of diversified fund typically stays relatively constant and avoids the ups and downs that comes with picking single stocks.

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