Twitter is grabbing the headlines thanks to the news that Elon Musk, the multi-billionaire owner of electric vehicle manufacturer Tesla, is offering to buy the company for around $43 billion (INR 4,300 cr). That values the shares, which are quoted on the New York Stock Exchange, at $54.20 each (around INR 4,135).
Musk says this will be his final offer – maintaining he won’t be drawn into a bidding war – and that he will consider his position as a Twitter shareholder if his offer is turned down. He bought a 9.2% stake in Twitter earlier this month.
The Twitter board will consider the offer and may decide whether or not to recommend Musk’s offer to its shareholders.
In a brief statement, it said: “Twitter, Inc. (NYSE: TWTR) confirmed it has received an unsolicited, non-binding proposal from Elon Musk to acquire all of the company’s outstanding common stock for $54.20 per share in cash.
“The Twitter Board of Directors will carefully review the proposal to determine the course of action that it believes is in the best interest of the company and all Twitter stockholders.”
If the shares remain below the $54.20 level, there is a potential for anyone buying Twitter stock now to make a profit if Musk’s bid at that level is accepted. Of course, if someone were to buy at the current price and the deal did not go through and the price then fell, they would be left with a trading loss if they sold out.
Victoria Scholar at Interactive Investor commented: “This is a deeply hostile move from Elon Musk, who has threatened to ‘reconsider’ his 9.2% stake in the company if his 100% acquisition offer is rejected.
Perceived hostility between Musk and Twitter employees has arisen because the social media intervenes to moderate content, sometimes imposing temporary suspensions on members or flagging content it thinks is flawed or misleading. The Tesla boss sees himself as wholly committed to free speech without restraint.
Ms Scholar said: “If Musk were to take control of the company there could be some significant changes with a shift in focus away from content moderation and healthy content sharing towards absolute free speech which Musk says is a ‘social imperative.’
“The biggest change, however, would be that the company would go private, allowing more flexibility and requiring less accountability. Plus we would expect to see the changes Musk outlined over the weekend including allowing users to pay with dogecoin and cutting the price of the Twitter Blue premium service.”
If you want to buy Twitter shares in anticipation of an increase in their value on the back of Musk’s intervention, you need to set up a demat account with an investment platform or use a dedicated share trading app and take the route of Liberalized Remittance Scheme (LRS) of the Reserve Bank of India (RBI). The scheme allows resident Indians to remit up to $250,000 per financial year for portfolio investments and other permissible transactions.
Forbes Advisor India’s guide on how to invest in global stocks details the different modes you can opt for while taking the LRS and could help you understand the costs and the tax liability related to your stock purchase. Another option is to buy a pooled investment fund which already had a holding in Twitter. Again, you could buy a stake in such a fund through an investment platform.
Nikhil Kamath, co-founder of Zerodha and True Beacon who has invested in Twitter via a fund, in a chat with Forbes Advisor India said looking at the fundamentals of the company and its subdued performance he does not believe buying the Twitter stock at this point may prove to be the best bet for a new investor.
First, and most importantly, there are no guarantees when it comes to share prices. They can and often do fluctuate minute by minute, gains can quickly become losses, and in the worst case scenario, you can lose all of your investment.
In other words, don’t buy Twitter or any other shares thinking you are on to a sure-fire winner. There is always risk involved, and you should be fully aware that you could make irretrievable losses.
However, if you understand and accept the risks, you could view share investment as a potential way to make more of a profit on your capital than you would be putting your cash on deposit.
Here are a few golden rules:
I am the UK editor for Forbes Advisor. I have been writing about all aspects of household finance for over 30 years, aiming to provide information that will help readers make good choices with their money. The financial world can be complex and challenging, so I’m always striving to make it as accessible, manageable and rewarding as possible.