The world’s richest person now owns one of the leading social media platforms with Tesla Inc (NASDAQ: NASDAQ:TSLA) CEO Elon Musk acquiring Twitter Inc (NYSE:TWTR). for $44 billion.
Here’s what investors would have done if they took a stake when Musk’s initial stake was announced.
What Happened: The captivating saga between Twitter and Musk dates back to January when the Tesla CEO began accumulating shares.
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Musk acquired a large number of shares and eventually hit the 5% ownership threshold which meant he would have to publicly disclose his position in the company.
On April 4, Twitter shares spiked when Musk disclosed a 9.2% stake.
Ten days later, Musk offered to acquire Twitter for $44 billion, or $54.20 per share.
“I invested in Twitter as I believe in its potential to be the platform for free speech around the globe, and I believe free speech is a societal imperative for a functional democracy,” Musk said at the time. “However, since making my investment I now realize the company will neither thrive nor serve this societal imperative in its current form. Twitter needs to be transformed as a private company.”
A back-and-forth of sorts occurred over the next several months. Musk walked away from the agreement citing a "material adverse effect," due to issues of spam and bot accounts.
Twitter sued Musk to complete the deal. Musk countersued.
As the court case proceeded, Musk again announced an offer to take Twitter private at $54.20 per share.
The deal is now nearing the finish line and Twitter shares will be delisted from the New York Stock Exchange giving $54.20 to current shareholders for each share they own.
Musk said he plans on creating a “common digital town square” with Twitter being a place to welcome both sides of the political aisle.
“That is why I bought Twitter. I didn’t do it because it would be easy. I didn’t do it to make money. I did it to try to help humanity, whom I love,” Musk said.
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Investing $1,000 in Twitter: Shares of Twitter spiked to over $50 in the pre-market trading session on April 4 after Musk’s stake was disclosed. Shares of the social media company opened at $47.87 on April 4.
A $1,000 investment in Twitter at market open on April 4 could have purchased 20.89 shares of TWTR. The $1,000 investment will be worth $1,132.24 when shares are delisted. This represents a gain of 13.2% in around seven months.
The 13.2% in seven months would be an annualized gain of 22.7% and greatly outpaced several leading stock indexes over the same time. An investment in the SPDR S&P 500 ETF Trust (ARCA:SPY (NYSE:SPY)), which tracks the S&P 500, is down 14.9% over the same time period.
Tesla shares are down 38.1% over the same time period. Some investors have pointed to Tesla shares being impacted by an overhang of Musk selling shares to help finance the deal.
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