What will happen at Twitter shares?
After the acquisition of Elon Musk is a legitimate question. After all, if the 44 billion maneuver is actually approved, Twitter would become a private company, which means it would be withdrawn from the largest stock exchange in the world, that of New York.
So let’s try to take stock of the situation and understand what the future of Twitter’s actions will be.
The point of the situation
To this day Twitter is still a public company. This does not mean that it belongs to everyone but simply that it is a publicly traded company and that its shares can still be bought and sold.
The acquisition of Elon Musk will turn it into a private company.
It will probably be months before the shares all go to Mr. Musk. This is because there are procedures to follow.
The first step has already been taken, and that is what we have seen this week. The South African-born multibillionaire has submitted a $ 44 billion purchase proposal to Twitter’s board of directors, meaning Elon Musk has offered to pay $ 54.20 for each Twitter share. The Board of Directors has given its green light to this maneuver but in reality they are not the only ones who have to do it.
The next step will in fact involve the shareholders who, during the annual meeting, will have to vote for or against the acquisition.
Should the shareholders decide to give the ok, the ball would pass to a number of regulatory bodies which should confirm the legitimacy of the agreement.
The future of Twitter shares
During this long period of time, which goes from the yes of the board to the yes of the US government and the consequent cancellation of the stock from the New York Stock Exchange, the shares of Twitter will still be on the market.
Shareholders are faced with three possible choices.
The first is to do nothing. That is, wait for the acquisition to come to an end – barring unforeseen circumstances – and then receive $ 54.20 per share guaranteed by the agreement with Elon Musk.
Lsecond option is to sell. All or part of the actions. In fact, there are shareholders who bought the shares when they were worth much less than now and selling would mean securing a profit, decreasing the risk. Risk dictated by a possible failure of the acquisition which, we remind you, is still possible.
The third option is to take advantage of the volatility of the shares.
What does it mean? Experts say that, during similar transitions, from public to private, the value of shares tends to fluctuate a lot and someone could therefore try to exploit this uncertain trend to earn a little more.
For example, some shareholders could take advantage of any drops to buy more shares before the acquisition, however, bearing in mind that any failure of the agreement could lead to a loss.
For all of them, there is only one rule to keep in mind: it is forbidden to buy Twitter shares at a cost of more than $ 54.20 because in that case the loss is guaranteed.
Also keep in mind that experts, to date, advise against buying Twitter shares.
For example, Max Gokhman, Chief Investment Office of AlphaTrAI Inc., told Bloomberg that “at the moment the rise is less than 5% and there is still the possibility that the deal will not be closed, also because it is always necessary to expect some surprises when to be involved is Elon [Musk]. At present, the purchase of the shares would not be a wise choice. “
This content is for informational purposes only, and does not represent investment advice.
The impact on investors
twitter 2021 10 d
Everything we have told you so far concerns investors and Twitter shares, therefore those who own even minimal shares of the microblogging social network.
However, the acquisition could also have repercussions on the rest of the market and on investors who have decided to focus on other technology companies, starting with Meta.
A public company must be accountable for what it does to its shareholders and a range of government entities. This means that the company must first of all present its financial results periodically and also justify internal choices and changes.
A private company, no. The fact that there is only one owner allows a company to be a bit “cheeky”, introducing changes and innovations more quickly and directly.
This will also apply to Twitter, with Musk who could make significant changes, capable of putting other companies in the sector in difficulty.
And a crisis in other companies could also result in losses for investors who have had nothing to do with Twitter.
Of course we still remain in the field of hypotheses. At least until the final approval of the agreement. As we have emphasized several times in this article, the yes of the Board does not imply the yes of all the other actors involved. So we just have to wait and understand what will happen over the next few months.