One of the biggest stories in the investing world for 2022 was the acquisition of social media platform Twitter by Elon Musk. The acquisition made Musk the CEO of Twitter, SpaceX and Tesla Inc TSLA — and had a large impact on the price of Tesla shares and his wealth.
What Happened: Musk completed the acquisition of social media platform Twitter in late October 2022, paying $44 billion for the company.
Musk began acquiring shares of Twitter in January 2022 with a disclosure that he had a 9.2% stake in the company filed in April 2022. He followed up the disclosure on April 14, 2022, by announcing he planned to buy the remaining shares he didn’t own for $54.20 each, a 54% premium over the closing price when he began investing in the company.
“I invested in Twitter as I believe in its potential to be the platform for free speech around the globe, and I believe free speech is a societal imperative for a functioning democracy,” Musk said at the time.
Since taking over Twitter, Musk has cut employees, announces major changes, and welcomed previously banned accounts like former president Donald Trump back to the social media platform.
To help finance the deal, Musk sold shares of Tesla earlier in 2022. Musk also sold shares again on several occasions to help provide additional cash to have on hand in case it was needed.
Musk most recently sold 22 million shares of Tesla from Dec. 12 through Dec. 14. After the latest sale, Musk now owns 423,622,432 shares of Tesla.
In a recent Twitter Spaces, Musk said he would not sell Tesla stock in 2023.
Several Tesla investors and critics have argued that Tesla shares were hurt in 2022 due to the “Twitter overhang,” with Musk needing to sell shares of the electric vehicle company to help fund the Twitter acquisition. Musk is also now the CEO of Twitter, splitting his time running the social media company, Tesla and SpaceX, which could lead to less time to focus on key Tesla priorities moving forward.
Tesla shares are down significantly in 2022 with the Twitter acquisition considered to be one of many factors hurting the stock.
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Investing $1,000 in Tesla Stock: Musk owning Twitter has been mostly negative on Tesla shares in 2022 due to his numerous stock sales and the potential distraction of running the social media company.
At the same time, Investors saw some possible benefits of Twitter and Tesla being unified under Musk's leadership, including better social media mentions and brand awareness for the company, which doesn’t advertise like traditional automotive companies.
Here’s a look at how an investment in Tesla since the Twitter acquisition has paid off.
Tesla shares opened for trading at a split-adjusted price of $333.10 on April 14, the morning Musk announced his intention to acquire Twitter. An investor could have purchased three shares of Tesla stock with the $1,000.
The $1,000 investment would be worth $329.61 today, based on the current $109.87 price for Tesla shares at the time of writing. This represents a loss of $670.39 or 67% since the April purchase.
The SPDR S&P 500 ETF Trust SPY, which tracks the S&P 500, has performed better than Tesla over the same time period. A $1,000 investment could have purchased 2.25 shares of SPY stock on April 14. The $1,000 investment would be worth $851.40 today, down 14.9%.
Investors could have turned a $1,000 investment in Twitter stock when Musk disclosed he owned 9.2% into $1,132.24 for a return of 13.2% in seven months.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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