Tesla shares received an upwards bump in after-hours trading Friday as investors reacted positively to Elon Musk’s move to terminate his $44 billion deal to buy Twitter.
Tesla shares rose 14.51% to close at $752.29 on Friday. The share price continued to edge higher after regular trading hours by as much as 3.39%, before settling to about a 2.68% increase as of 7:48 pm ET.
Musk’s legal team issued a letter Friday formally attempting to pull out of an agreement to acquire Twitter. The letter came after Musk publicly attacked Twitter — via Twitter no less — over the social media company’s bot calculations prompting speculation that he would try to exit the deal.
The letter said Musk was terminating the deal because Twitter is in material breach of multiple provisions of its merger agreement and also argued that the company “appears to have made false and misleading representations” that he had relied on.
Tesla shareholders have publicly expressed concern about Musk’s ability to effectively run Tesla while owning Twitter — along with his handful of other companies that include SpaceX, Neuralink and The Boring Company. Their cries became progressively louder as Tesla’s shares continued their downward trajectory.
In early April, when Musk took a 9.2% stake in Twitter becoming the social media company’s biggest shareholder, Tesla shares were priced at $1,145.45. The share price has since fallen more than 34%.
One of the bigger drops in the past several months came April 26, a day after Musk agreed to buy Twitter for $44 billion. Tesla stock tanked more than 12%, bringing its market capitalization down to $906 billion.
Twitter shares, which initially rose in early April after Musk disclosed his stake in the company, have also fallen. Since April 4, Twitter shares have dropped 26.34%, pushing its market capitalization to $28.31 billion. Today’s share price of $36.81 is far below Musk’s cash offer for Twitter that valued the business at $54.20 per share.
While Tesla shareholders may have enjoyed a momentary sense of relief, the Twitter-Musk saga is hardly over.
Twitter’s board has already promised to fight Musk. Bret Taylor, chairman of the Twitter board, tweeted Friday “We’re committed to closing the transaction on the price and terms agreed upon with Mr. Musk and plans to pursue legal action to enforce the merger agreement” “We are confident we will prevail in the Delaware Court of Chancery.”