What Happens To Twitter Shares After Buyout?

You have probably wondered what happens to shares of a company you own once someone, or another company, buys out the company you invested in.  This can vary from situation to situation. For our example today, we will be using Twitter and its acquisition by Elon Musk. This is not new and I am late to the party but I wanted to go over it as it relates to investing. Elon Musk bought Twitter back in October 27, 2022 for a whopping price of $44 billion.  That is an insane amount of money and I am not sure what I would do with it all.

What happens to my shares?

Shares after a takeover remain in limbo until a deal is reached. Shareholder meetings must take place to determine what price the shares will be and how they will be processed.

What did Elon Musk do?

In the case of Twitter, Elon decided that he wanted the company to be private instead of public. After a shareholder meeting, 98% of the holders agreed to a rate of $54.20 per share. Depending on what you bought the stock for you could have made a nice profit. With this buyback, Twitter becomes private.

What are the tax implications?

If you held the stock for less than a year, you will be subject to a short-term capital gains tax.  This is unavoidable and short-term capital gains are taxed as income. Depending on the rest of your income for the year, you will be taxed at a rate of 10% to 37%

What should you do now?

I would suggest investing in twitter competitors. Research companies competing against Elon and see which ones make the best financial sense to invest in. These companies could rise in share price dramatically and could be a good short-term profit stock.