How to Invest in X

Social media platform X has been busy this week, with former President Donald Trump returning to the platform for a live conversation with Elon Musk on Monday night, with more than 1 million listeners tuning in worldwide. On Wednesday, Grok, the large language model developed by xAI and available to X subscribers, was updated to version two, giving users wider capability to complete tasks and generate images. While the company traditionally relied on ad revenue in its Twitter days, its also recently introduced paid user subscriptions to its business model.

A retail investor cannot invest directly in X, formerly known as Twitter. When Elon Musk purchased the company in 2022, it became privately owned, meaning that it does not list shares on public exchanges like the New York Stock Exchange or NASDAQ. The only way to potentially purchase shares is to buy them directly from third parties or from the company itself. By law you must be an accredited investor or institution in order to do this.

Here’s some context. Remember, investments are risky and should be made with care. Consult with a financial advisor who can help you build an investment strategy based on your goals.

Why Is X/Twitter Private?

Until October 27, 2022, X (then known as Twitter) was a publicly traded company. It was listed on the New York Stock Exchange under TWTR, with a final recorded share price of $53.70. After this date Elon Musk purchased a majority of outstanding Twitter stocks for $44 billion, or $54.20 per share.

This is a process known as taking a company private. Musk, with a group of lenders and other investors, made what is called a “tender offer” to Twitter and its shareholders. This is a bid to buy a significant portion, or an outright majority, of securities from a company and its shareholders.

A tender offer is different from a public stock purchase (when the investor buys shares from the market at large) or a private stock sale (when the investor buys shares directly from a third party). With a tender offer, the investor offers to buy securities from the company’s shareholders as a group. The shareholders and company vote on whether to accept this offer, with conditions set by the company’s articles of incorporation.

If the shareholders vote to approve the tender offer it triggers a sale. The company and its shareholders sell their stock based on the terms of the offer. This includes stock owned by dissenting shareholders, who are paid for their stock at the accepted rate.

Taking a company private occurs when an outside investor consolidates so many shares that the company falls below the threshold of public trading. Generally, this occurs when fewer than 300 individuals or entities own shares of the company. Below this threshold, the shareholders can declare the stock private. It is delisted from public exchanges, no longer has to meet SEC public filing requirements, and can only be freely traded by accredited and institutional investors.

This is what happened in the case of Twitter. Musk, along with a group of investors and lenders, made a tender offer to purchase all publicly available shares of the company. The shareholders ultimately approved this offer, after the company initially resisted with a poison pill strategy, and triggered a sale, after which Musk had consolidated ownership to a small enough group of investors that he could take the company private.

At $54.20 per share, Musk’s offer was considerably higher than Twitter’s value at the time in April, 2022. While this led to litigation and public disputes, it is extremely common for investors to offer at least some premium in a tender offer. This is their incentive for shareholders to agree to sell their stock all at once rather than to wait for future gains.

Now that Twitter, since renamed X, is a privately held company it is not listed on any public marketplaces, it is not traded through market makers and clearing houses, and it is not subject to public regulation. The only way to potentially buy this stock is directly through a current shareholder or the company itself.

Can You Buy Shares of X?

You cannot publicly invest in X stock. As a privately held company, X does not have shares traded on any public marketplace. Shares are held by a small number of large investors, such as Musk himself, and firms such as BlackRock and Vanguard.

Individuals may be able to privately invest in X by purchasing shares directly from these large investors. However, since X is a privately held company, it is illegal for retail investors to buy and sell this stock. Only institutions and accredited investors can trade X stock. Even among this cohort, an investor would need to contact someone who currently owns shares of X and conduct a direct transaction.

A financial advisor may be able to help some individuals invest in private companies.

Alternatives To Investing In X

As a privately held social media company, it’s a little bit difficult to invest in the market around X. The company doesn’t necessarily rely on inputs and related companies the way that many other industries do, so it’s harder to find publicly traded companies whose fortunes are linked to X. While the specifics are not available, X’s main income streams seem to be advertisers, and more recently, paid subscriptions. Musk’s AI company xAI provides Grok for X users, but that is also a privately help company in which retail investors cannot invest.

The Bottom Line

X, formerly known as Twitter, is a privately held social media company. Only accredited investors and institutions may freely trade this stock. For ordinary investors looking to side-invest in X, the best option might be to invest in other publicly traded social media companies.

Tips On Private Investing

Investing in private companies can be a challenge for most people. These tend to be higher risk/higher reward investments. Since they aren’t subject to SEC reporting requirements, ordinary investors aren’t allowed to freely trade private stock. So, how can you invest if you’re interested in a privately held firm?
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