Following a new Securities and Exchange Commission (SEC) filing outlining revisions to Elon Musk’s strategy for purchasing the firm, Twitter shares have surged in after-hours trade. To put it briefly, Musk first said he would take out a $12.5 billion margin loan against other holdings to assist pay for his purchase of the social media site. However, they have expired, and according to Twitter, “[Elon Musk] has] pledged to… enhance the aggregate principal amount of the equity commitment thereunder to $33.5 billion concurrently with the above.”
To put it another way, Musk now intends to put up $33.5 billion in his attempt to acquire Twitter. According to CNBC, the head of Tesla and SpaceX is in discussions to assist fund the transaction or roll their shares over with former Twitter CEO Jack Dorsey and others. After Musk’s frantic interactions with Twitter, what first seemed to be a drive to acquire the business become less certain over time. Musk switched to outright acquiring Twitter after buying a stake in the firm and coming close to joining the board. Although the deal was complicated, it established a per-share price of $54.20 for Twitter stock, giving the business a $44 billion valuation.
The market began to value Twitter more and more as though the transaction was dead after Musk made a number of social media postings criticizing the business, canceling the purchase, or both. How closely a firm is trading near its selling price may be used to gauge market confidence in a transaction; Twitter’s shares surged to the $50 range when the agreement was reached then dropped to the $37 level when it seemed the transaction was less definite. Investors are putting their money on the acquisition now that there is additional evidence that Musk is still working on the financing of the purchase — even though the filing is not without complexity.
Twitter’s stock price rises as a result of the filing, rising by more than 5 percent after hours. Although there is considerable skepticism in the public market that the CEOs of SpaceX and Tesla would truly acquire the social media firm, the price has only returned to about $39 per share barrier. Beyond the broader economic downturn, today’s dramatic shakeup saw Dorsey leave the Twitter board and Twitter shareholders reject the re-election of Silver Lake co-CEO Egon Durban.
Twitter also agreed to pay $150 million to resolve a user privacy dispute in which law enforcement officials accused the firm of improperly managing user data over a period of years. This settlement was reached with the U.S. Department of Justice and the Federal Trade Commission.