What Investors Should Know About Elon Musk Buying Twitter (TWTR)

The social media giant accepted Musk's buyout offer on April 25

Elon Musk, the billionaire CEO of Tesla, Inc. (TSLA) and the richest person in the world, is moving forward in his bid to buy social media giant Twitter, Inc. (TWTR). Twitter's board of directors agreed to Musk's $44-billion offer on April 25, paving the way for the billionaire to buy the company and take it private.

The back-and-forth between Musk and Twitter has been highly publicized for months. Now that a deal is pending, though, investors will look more seriously into how Musk's purchase could affect their investments. The ramifications are particularly significant for Twitter shareholders and the social media company's users. Below, we explore some of the ways that the Twitter deal could affect you.

Key Takeaways

  • Twitter accepted a $44-billion offer from billionaire Elon Musk, who is seeking to acquire the social media company.
  • If the acquisition closes, investors in the social media and tech spaces will face a landscape that could be dramatically different.
  • Twitter will become a private company, which means significantly less financial and operational transparency.
  • Musk has also suggested that major changes to the user experience may be on the way as well.

Impacts for Shareholders and Investors

If and when the acquisition closes, Twitter shareholders will receive $54.20 in cash for each share of Twitter stock they hold. This means a cash influx for shareholders and especially for those holding a a significant number of shares. However, the key questions here are if the acquisition will close and when. Although Twitter's board of directors has approved the sale and the company has entered into a definitive agreement to be acquired by an entity wholly owned by Musk, the deal is not complete. Twitter shareholders must approve the deal at the company's next annual meeting. Finally, the deal must meet regulatory approval and other closing considerations. Twitter said that it expects the deal to close sometime later in 2022, but these hurdles are not necessarily insignificant.

For investors who don't hold Twitter stock, the fact that the company is likely to go private could have rippling impacts on other social media companies like Meta Platforms, Inc. (FB), the company behind the Facebook network, and tech giants like Apple Inc. (AAPL). With unilateral control over Twitter's popular platform, Musk could institute changes that put pressure on other tech companies. For example, Twitter could dramatically alter its approach to providing digital space for other companies on its platform—already a contentious issue in the tech world—which would put pressure on other companies to follow a similar path.

As a private company, Twitter will not be required to report on its financial performance in the same way that it has as a publicly traded firm. For investors in the social media and tech industries, this means less transparency overall from one of the biggest players.

Impacts for Twitter Users

As sole controller of Twitter, Musk would also be able to enact a variety of platform changes, including several that he has speculated about or advocated for in public. Musk has expressed his interest in adding an "edit" button that would allow users to go back and change tweets they have already posted. This is also a hotly contested question and one that Twitter's leadership has so far resisted.

Musk has also voiced his intention to "make the algorithms open source to increase trust" and to "authenticat[e] all humans." These and other objectives are geared toward the goal of ensuring that Twitter allows for free speech, according to Musk. It is difficult to say exactly how these changes could affect the everyday Twitter user, but it's possible that users will need to submit additional information for verification, that rules regarding acceptable content could be changed, or that users who have been banned may be allowed back onto the platform, for instance.

What will happen to Twitter shareholders?

If Elon Musk's purchase of Twitter closes, Twitter shareholders will receive $54.20 in cash for each share, and the company will become private.

What could change for investors when Musk buys Twitter?

Twitter as a company is likely to change significantly. First, as a private entity, Twitter's financial performance will no longer be as visible to outsiders. Second, as owner of the company, Musk will have latitude to enact significant changes to the platform that may put pressure on other tech companies.

How will the user experience change when Musk buys Twitter?

This is difficult to say. Elon Musk has suggested that he may change elements of the platform itself, including adding an "edit" button. Policies surrounding acceptable content may change, as may verification requirements for users. But there could also be a variety of other changes that are currently unknown.

Article Sources

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  1. PRNewswire. "Elon Musk to Acquire Twitter."

  2. WCNC Charlotte. "How Elon Musk Buying Twitter Could Impact You."

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