Elon Musk Is Officially Buying Twitter. Here’s What That Means for TWTR Stock.

What a crazy day it’s been for investors in social media giant Twitter (NYSE:TWTR). Shares of TWTR stock were halted at 2:41 p.m. Eastern, pending news.

Twitter (TWTR) logo displayed on a smartphone screen with a hand ready to use the app
Source: shutterstock.com/khak

Well, it didn’t take long for reports to circulate about just what that news was. Indeed, as of 2:50 p.m. Eastern, we have news.

Unsurprisingly, the halt was a result of the high-profile offer from celebrity CEO Elon Musk. The real surprise was the fact that this news halt was tied to Twitter accepting Elon Musk’s buyout offer.

There are certainly reasons why investors may feel taken aback by this news. Elon Musk’s “best and final” offer of $54.20 per share was one that many did not expect to be successful. That’s due mainly to the initial strong response from Twitter’s board, which enacted a poison pill to stop Musk from acquiring a greater percentage of the company.

Alas, here we are. Let’s dive into what this deal means for investors.

TWTR Stock Shoots Higher as Musk Closes the Deal

The acquisition deal was announced just before 3:00 p.m. Eastern, less than two weeks after Musk put forward the initial offer. Indeed, the fact that this deal went through so quickly is perhaps just as impressive as the fact that it occurred in the first place.

This $54.20 offer to buyout existing Twitter shareholders amounts to a whopping price tag of around $43 billion. One might wonder how anyone, even Elon Musk, could pull off such a massive transaction.

According to recent U.S. Securities and Exchange Commission (SEC) filings, Musk has reportedly received commitments for up to $46.5 billion in financing to do this deal. Approximately $25.5 billion in debt financing and $21 billion in equity financing from Morgan Stanley (NYSE:MS) should do the trick. Accordingly, unlike previous “funding secured” tweets that were proven to be misleading, Musk had the chips to play with going into this transaction.

There are still many unknowns remaining regarding Musk’s plans for the company. Only time will tell how this all continues to play out. For now, I’m enjoying watching the pandemonium from the sidelines.

On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Chris MacDonald’s love for investing led him to pursue an MBA in Finance and take on a number of management roles in corporate finance and venture capital over the past 15 years. His experience as a financial analyst in the past, coupled with his fervor for finding undervalued growth opportunities, contribute to his conservative, long-term investing perspective.


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