Twitter surges as Musk proposes going through with deal

© Reuters. Twitter logo and stock graph are seen through a magnifier displayed in this illustration taken September 4, 2022. REUTERS/Dado Ruvic/Illustration

By Noel Randewich

(Reuters) – Shares of Tesla (NASDAQ:) Inc pared early gains while Twitter Inc (NYSE:) surged on Tuesday after reports that billionaire Elon Musk proposed to go ahead with his takeover of the social media platform at $54.20 per share.

Twitter jumped almost 13% to $47.93 before the stock was halted after a report from Bloomberg News. Two sources familiar with the matter later told Reuters that Musk is proposing to go ahead with his original deal, signaling an end to a legal battle that was about to go to trial.

Tesla was last up 2.2% at about $247, down from an earlier high of $257.50.

Over $22 billion worth of Tesla shares had been exchanged as of mid-afternoon, accounting for about a tenth of all trading on Wall Street, according to a Reuters calculation.

GRAPHIC-Elon Musk vs Twitter – https://fingfx.thomsonreuters.com/gfx/mkt/znvneylmkpl/Pasted%20image%201664901210577.png

Musk and Twitter were set to enter the courtroom this month, with Twitter seeking an order directing Musk to follow through on his agreement last April to buy the company for $54.20 per share, equivalent to $44 billion. Musk ripped up the deal in August, saying he was misled about the number of spam accounts on Twitter.

Tesla’s stock has been under pressure since Musk agreed to buy Twitter, with investors concerned about how much of the car maker’s shares he might sell to fund the purchase.

Twitter and Musk’s lawyers were not immediately available for a comment.

GRAPHIC-Musk shields Twitter from social media meltdown – https://fingfx.thomsonreuters.com/gfx/mkt/zjvqkxnmrvx/Pasted%20image%201664904623282.png

The possibility that Musk might follow through on his deal has shielded Twitter’s stock price in recent months from a meltdown in the shares of other social media companies amid a broad Wall Street selloff over worries about rising interest rates and a weak economy.

Twitter is up 11% year to date, versus a 58% drop in Facebook-owner Meta Platforms.