Twitter Faces Delisting as Elon Musk Takes the Company Private
New Twitter owner Elon Musk is taking the social media company from public to private. What happens to a company (and its shareholders) when it delists?
Oct. 28 2022, Published 1:30 p.m. ET
The circus show is coming to a head. With Elon Musk’s $44 billion purchase of Twitter finalized, the billionaire is making swift changes to the company, not the least of which is taking it from public to private. This means Twitter (TWTR) stock is getting delisted in the near future.
What does this mean for the company and its shareholders that have stuck around despite Twitter’s (and the tech sector’s) bumpy year?
Why is Twitter being delisted?
As part of Musk’s buyout deal, he’s taking Twitter private. This means TWTR stock will no longer trade publicly on the U.S. stock market. This is common for public companies that get acquired by a private company (yes, Musk is an individual, but a high-net-worth individual wrapped up in corporations of his own).
When is Twitter stock delisting and what happens if you own it?
Twitter stock will officially delist on Nov. 8. At that point, the company will buy out shareholders at a specified price per share, giving them cash for the transaction. Whether or not you see a return on your investment depends on your cost basis, aka the price at which you first purchased TWTR stock.
The buyout price for Twitter stock on its delisting date is $54.20 per share. This is lower than Twitter’s value for much of 2021, but it's a premium over the majority of any shares purchased in 2022. As of mid-day on Oct. 28, TWTR stock was actively trading at $53.70 per share, slightly below the buyout price at the time of delisting.
If you own Twitter stock now, hold on until the delisting occurs and you’ll receive cash that you can invest elsewhere (or hold onto for liquidity).
More changes are coming at Twitter beyond delisting.
Musk is shaking up Twitter from the jump. He may have already fired CEO Parag Agrawal as well as two other executives, according to a source who spoke with CNN. CFO Ned Segal is said to be one of the other executives that have departed.
The deal between Musk and Twitter has been so dramatic, prolonged, and contentious that it’s almost unbelievable it actually went through. Not that long ago in July, Twitter sued Musk over his threat to abandon the deal, stating he “refuses to honor his obligations to Twitter and its stockholders because the deal he signed no longer serves his personal interests.” The finalization of the deal means Twitter as an entity can at least move on, even if some major players in the company are being left behind.
Musk said on a Tesla earnings call last week, “The long-term potential for Twitter, in my view, is an order of magnitude greater than its current value.” As for whether Twitter moves in a profitable direction, that’s a question for another day.
Whatever happens, current Twitter stock shareholders at least know what they’re getting out of the deal and are being rewarded, if only marginally, for sticking around despite all the drama.
