Tesla shares get baby bump as Elon Musk tries to pull out of Twitter deal

Tesla shares rallied in after-hours trading on Friday as investors reacted positively to Elon Musk's decision to end his $44 billion deal. dollars to buy Twitter.

Tesla stock rose 14.51% to close at $752.29 on Friday. The stock price continued to rise slightly after hours trading up to 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.

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The letter stated that Musk was terminating the agreement because Twitter materially violated several provisions of its merger agreement and also claimed that the company "appears to have made false and misleading statements " according to which he had relied on.

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's stock continued its 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 stock price has since fallen more than 34%.

Image credits: Screenshot/Yahoo Finance

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.

Twitter shares, which initially rose in early April after Musk revealed 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 a moment of relief, the Twitter-Musk saga is barely over.

Twitter's board has already promised to fight Musk. Bret Taylor, chairman of Twitter's board of directors, tweeted on Friday: "We are committed to completing the transaction at the price and terms agreed to with Mr. Musk and plan to take legal action to enforce the deal. merger. We are confident that we will prevail in the Delaware Court of Chancery. »