Since this past Spring, Elon Musk has been trying to purchase Twitter, changing the company from a publicly traded company to a privately owned company. That deal has been done. As of Nov. 8, the company was delisted from the New York Stock Exchange. If you own stock in the company, you will want to know what happens to your Twitter shares. We cover that here. You can also work with a financial advisor to analyze how your portfolio is impacted or to help you create a new plan for your investments moving forward.
What Will Happen to Your Twitter Stock?
On Nov. 8, 2022, Twitter got a record of all remaining shareholders who will be paid out of their shares at a rate of $54.20 per share. This was a rate agreed upon by a 98% margin at a shareholder meeting in September. This price is also a substantial premium, meaning you’ll receive significantly more for your Twitter stock than you would have on the open market.
Transitioning a company from public to private takes time and you may want to have the money from this stock in your account so you can use it as soon as possible. However, you’re going to have to wait. The whole process could take a few weeks for funds to show up in your account.
What Are the Tax Implications of Twitter Going Private for You?
You could end up with a big tax bill come April with the privatization of Twitter. That’s because the extra cash premium applied could you open you up to significant capital gains tax. With the money you made on the sale, you’ll be taxed at a rate depending on how long you held the stock.
If you held the Twitter stock for less than a year, you’ll be subject to short-term capital gains tax. Short-term capital gains are taxed as income, which can affect which tax bracket you fall in. Depending on the rest of your total income, you’ll be taxed at a rate of 10% – 37%.
Long-term capital gains are gains you see after selling a stock you’ve held for over a year. These are taxed at a more favorable rate of 0% – 20% depending on your income. So, if you bought stock when Elon announced he was buying Twitter in the Spring, you may be seeing a higher tax bill next year. However, if you’ve been holding Twitter for years, you’ll see a smaller tax rate.
What Should You Do With the Payout From Twitter Stock?
Now that you know what will happen to your Twitter stock, it’s essential to have a plan once the deal goes through. With other tech companies, like Meta, are seeing their stock price drop, getting a premium payout from Twitter is exciting. But what do you do with the money once you receive it? Here are a few ideas:
1. Recession-Proof Your Portfolio
Tech is a volatile area of the market, especially right now. If you’re worried that tighter times may be ahead, recession-proofing your portfolio makes sense. That entails avoiding volatile markets, investing in precious metals, focusing on passive income streams and keeping cash on hand.
2. Rebalance Your Portfolio
With the extra influx of cash from Twitter, and a shifting market, now is a great time to rebalance your investment portfolio. This is the process of determining what asset types work best for you to reach your goals. Maybe you want to strategically place your money in bonds to invest more conservatively or maybe you think the opportunity is in commodities. Having cash from the Twitter sale is a good place to start reassessing your goals.
3. Consider Investing in Twitter Competitors
While this is not the safest idea, if you want to stay invested in social media, and if you’re doubtful of Twitter’s future, you could bet on its competitors. Alphabet, KKR and Softbank (two firms that own shares of ByteDance, Tik Tok’s parent company), Snap and Meta all offer shares on the market. Be aware that many of the same issues Twitter has faced around privacy, bots and misinformation are still problems with these companies and could affect their stock price in the future.
Why Would Elon Musk Want to Take Twitter Private?
While it’s not the place of this article to speculate about anyone’s motives, it is important to understand why Musk would take Twitter private. Publicly traded companies are beholden to shareholders. The ownership is wide and a lot of people have a say in it. Elon clearly wants to make drastic changes to the platform with little input from others. By taking the company private, he’s closed the circle of influence.
Making Twitter privately held gives Elon Musk more power to shape the platform and impose his vision. A classic example of a similar move is what Michael Dell did with Dell computers in 2013. He took the company private to make drastic changes. However, because of his swift action, the company fared much better and went public again in 2018. Only time will tell if Twitter will do the same.
The Bottom Line
So what will happen to your Twitter stock? If you held shares, you should be seeing a payout of $54.20 per share hit your account within the next few weeks. Know that this could have major tax implications for you. It’s important you have a plan to handle the taxes but also know where you want to use the money once it arrives.
Tips for Investing
- If you’d like help determining how to reinvest your Twitter money, consider connecting with a financial advisor. A financial advisor can help you create a financial plan or help you find investments that will provide a similar return for your overall portfolio as Twitter did. Finding the right financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
- Want to know how you should allocate your assets now that your Twitter stock has been bought? Use SmartAsset’s asset allocation calculator to help you balance your portfolio.
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