Elon Musk has shocked the world with his purchase of Twitter

The improbable has come true. After initial resistance from Twitter’s board of directors, suddenly the tables were turned and it agreed to a buyout offer for Twitter for $54.20 per share, or $44 billion. The move logically raised a cloud of questions. For example, should investors be worried, or is this instead good news for the social network? Opinions vary, as does speculation about the motive behind the move by the world’s richest man. What is certain is that this move may significantly affect the entire social networking segment.

What is Musk’s intention? No one knows


Just a week ago, the board of directors came up with the so-called “poison pill”, or a procedure that was supposed to prevent the so-called hostile takeover, as Musk’s original purchase of a nearly 10 percent stake in Twitter in the stock market was considered to be. And today, Musk has suddenly received support from former Twitter CEO and founder Jack Dorsey as well.

A good question is, does Musk have a plan? For now, he says he wants to make Twitter a platform that is trusted and broadly inclusive. Sounds good, but everything can be hidden behind this “curtain”. There are various speculations, for example that Musk is planning to charge for the platform (although this seems like obvious nonsense, as this move would bring an immediate outflow of users). Some of the current share holders and about employees are rejoicing, as they hope for a “brilliant plan” by a man who has already accomplished great things. Others, on the other hand, are worried. Shares rose about 6 percent in the first week after the news was announced and then fell.

Profit opportunity for investors ?


Musk wants to pay stockholders $54.20 per share. That’s an amount 38 percent higher than on April 1, which was the last business day before Musk disclosed his ownership of a 10 percent stake in the company. His interest has brought Twitter’s stock up.

According to information, the earliest a deal to buy the shares should close is in three to six months. The interesting moment will be the financing. The Tesla owner refutes doubts about his ability to “put together” a huge sum of money by saying that he has commitments for loans from several banks amounting to $13 billion. Another $12.5 billion could be raised through a stake in Tesla, and the last $21 billion would have to be backed by cash. Where it will come from no one knows.

It is fair to say that Musk will add incredible influence to his fabulous wealth after taking over Twitter. Because owning a social network with millions of users and a huge impact on global events is a very powerful tool. Of course, investing in a social network can also be risky, as evidenced by the stories of many once-popular networks that have ended up in obscurity. Musk is a complete novice in this field and, as he is used to personally running his companies, he may stumble with his decisions.

What is interesting is the looming opportunity for investors. Today, Twitter’s stock is trading below $50. If Musk announced a buyout at a price of $54.20 per share, the difference between those amounts would mean a guaranteed profit. Of course, this deal could still fall through for a number of reasons. We’ll see how it all plays out.

Article Source: Trend.sk

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