- Twitter (NYSE:TWTR) stock is rising on news that Elon Musk is putting more cash into the deal
- Investors see the latest development as evidence that Musk is committed to buying Twitter for $54.20 a share
- The acquisition of Twitter is not yet final and more drama could be ahead
Source: Worawee Meepian / Shutterstock.com
Twitter (NYSE:TWTR) stock is up 5% today on news that Elon Musk is putting up more cash to acquire the social media company.
A new regulatory filing shows that Musk is raising the amount of money he is personally putting up in his bid to buy Twitter to $33.5 billion.
Previously, Musk said he would put up $27.25 billion. The total value of the deal is $44 billion. Investors see this latest development as a sign that Musk is committed to acquiring Twitter, which is why shares of the company are up 5%.
Before today’s leg higher, TWTR stock had been down 13% year to date.
What Happened With TWTR Stock
Musk’s increased investment follows a Twitter shareholder meeting earlier this week. Last week, Twitter’s board of directors unanimously recommended that shareholders accept Musk’s offer of $54.20 a share for Twitter stock. Twitter filed a proxy statement with the U.S. Securities and Exchange Commission (SEC) last week that outlined the transaction’s history and terms of the negotiations.
The regulatory filing shows that Musk has so far lined up 19 investors contributing a total of $7.14 billion. The Tesla (NASDAQ:TSLA) CEO also said that he no longer plans to rely on a margin loan backed by shares in the electric vehicle maker.
On April 1, Musk revealed that he had purchased a 9.1% stake in Twitter. He then announced a plan to acquire all outstanding shares of the company that he didn’t already own. He made the offer on April 14 and Twitter’s board of directors accepted the offer on April 25. Musk has said he plans to take Twitter private once the acquisition is finalized.
Separately, Twitter co-founder Jack Dorsey has left the company’s board of directors. Dorsey stepped down as Twitter’s CEO last fall.
Why It Matters
Musk had cast doubt on his acquisition of Twitter in recent weeks, taking issue with the number of bots and spam on the social media platform and saying that his purchase of the company was “temporarily on hold.” News that Musk is increasing the amount of cash he is personally putting into the acquisition is being taken by investors as a sign that Musk is committed to the deal succeeding.
The increased likelihood that TWTR stockholders will receive $54.20 for each share that they own has investors piling into the stock today.
However, investors should keep in mind that Musk’s purchase of Twitter is not yet final and that it remains subject to regulatory review. The deal’s success is by no means assured and a lot could still go wrong with the acquisition over the coming months.
What’s Next for Twitter
TWTR stock jumps higher today on news that Musk is putting up more of his own money to buy the social media giant.
However, the drama surrounding his acquisition of Twitter is not likely over just yet. Investors should be careful with Twitter stock.
On the date of publication, Joel Baglole 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.
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