When will Twitter shareholders get paid? 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.
When will Twitter shareholders get paid?
In most cases of companies being taken private, it is a matter of weeks and not days. Then, once private, a company’s shares can no longer be traded publicly because the company is delisted from the public exchange on which its shares once traded. Until then, investors can continue to invest in a business that is going private.
So, for example, once the Twitter deal is officially closed and it opts to go private, Twitter shares will cease to trade on the NYSE and holders will receive $54.20 per share owned.
What happens to your Twitter stock now that it’s a private company
Now that Elon Musk has closed on his acquisition of the social media platform Twitter, what happens to Twitter’s stock?
The transaction to make Twitter a private company was completed late Thursday, according to a Securities and Exchange Commission document. By Friday morning, Twitter’s stock had already stopped trading on the New York Stock Exchange, where it had been listed since 2013.
Next, Twitter will get a record of everyone who owned shares as of Thursday night’s closing. The majority of shareholders will likely be represented by brokerage agents, according to Brian Quinn, a professor of securities law at Boston College.
It’s these agents who will be paid the $54.20 owed for each share, Quinn said. That was the price Musk agreed to pay for the company, and the price Twitter shareholders approved by a 98% margin in September.
So most Twitter shareholders now only need to sit back and wait to get paid, Quinn said. And the payout should happen soon.
“You don’t have to do anything; your broker will handle all of that,” Quinn said. “And it will happen in the next week or so. It won’t take long.”
On the other hand, Twitter shareholders no longer retain any rights to the company. That means a shareholder cannot attempt to convene a new meeting, or sue the company as someone who owns the stock.
“They’d have no standing,” Quinn said. “The only thing you can do is wait to get paid $54.20 a share.”
Quinn added that that price represents a great return on investment for most Twitter shareholders, given the stock market drops that other tech companies, like Snapchat and Facebook’s Meta have experienced.
“It’s better than they could have possibly have imagined,” Quinn said of the final sale price for Twitter shares.
In addition to private asset management firms and large individual stockholders like cofounder Jack Dorsey, Twitter’s largest shareholders included pension funds that invest for teachers, police officers and state workers in New York, California, Florida, and Wisconsin, Reuters reported.
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.
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.
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