Tesla shares rose in after-hours trading on Friday as investors reacted positively to Elon Musk’s decision to end his $44 billion deal to buy Twitter.
Tesla shares rose 14.51% to close at $752.29 on Friday. The stock price continued to climb after-hours trading as high as 3.39%, before stabilizing at around 2.68% at 7:48 p.m. ET.
Musk’s legal team released a letter on Friday formally attempting to back out of a deal to acquire Twitter. The letter came after Musk publicly attacked Twitter – via Twitter no less – over the social media company’s bot calculations, sparking speculation he was trying to get out of the deal.
The letter said Musk was terminating the deal because Twitter materially violated several provisions of its merger agreement and also said the company “appears to have made false and misleading statements” on which it relied.
Tesla shareholders have publicly expressed concern about Musk’s ability to effectively manage Tesla while owning Twitter, along with his handful of other companies, including SpaceX, Neuralink and The Boring Company. Their cries grew louder and louder as Tesla shares continued their downward trajectory.
In early April, when Musk took a 9.2% stake in Twitter, becoming the social media company’s largest shareholder, Tesla shares were priced at $1,145.45. The share price has since fallen more than 34%.
One of the biggest drops in recent months came on April 26, a day after Musk agreed to buy Twitter for $44 billion. Tesla stock fell more than 12%, bringing its market capitalization down to $906 billion.
Shares of Twitter, which initially rose in early April after Musk disclosed his stake in the company, also fell. Since April 4, shares of Twitter have fallen 26.34%, pushing its market capitalization to $28.31 billion. Today’s stock price of $36.81 is well below Musk’s cash offer for Twitter which valued the company at $54.20 per share.
While Tesla shareholders may have felt momentary relief, the Twitter-Musk saga is barely over.
Twitter’s board has already promised to fight Musk. Bret Taylor, chairman of the board of directors of Twitter, tweeted On Friday, “We have committed to complete the transaction at the price and terms agreed with Mr. Musk and expect to take legal action to enforce the merger agreement. We are confident that we will prevail in the Delaware Court of Chancery.