The Twitter board confirmed that a deal had been met with the South African businessman after rumours of takeover spread on Monday 25 April.
Musk has said he believes changes are needed in order to help the site thrive and better support free speech.
But with Musk’s plans to take the company private, how has the deal affected stock prices, and what will happen if you currently own shares in Twitter Inc?
Here is everything you need to know.
What has happened to Twitter’s stock price?
Twitter Inc’s stock prices jumped 5.7% to $52 per share after agreeing to sell itself to Musk.
On 14 April, Musk announced an offer to buy the social media platform for $54.20 per share - Musk’s quoted price is thought to be a reference to ‘420’, a cannabis culture slang phrase for marijuana consumption.
While the stock is up sharply since Musk made his offer, it is well below the high of 77 dollars per share it reached in February 2021.
What will happen to my stock?
Under Musk’s proposal to buy the company, he plans to take it private.
Privately held firms are not listed on stock exchanges, and their stock cannot be bought or sold publicly. They are often owned by a family or a small group of shareholders.
If the deal goes through (there are still a lot of legal wranglings until it is 100% confirmed), Twitter will be delisted from the stock exchange and will no longer be available for public trading.
Musk said on Twitter that he would try to keep "as many shareholders in [a] privatised Twitter as allowed by law,” but what does it mean for you if you’ve already invested in the social media network’s stock?
At some point in the sale process, Twitter will propose a “tender offer” for a minimum of 20 days.
Essentially a public offer for shareholders to sell their stock at a specified price - in this example, $54.20 per share - the tender offer will represent the company’s desire to buy all outstanding shares.
The United States’ Jumpstart Our Business Startups Act (JOBS) of 2012 allows Twitter to have up to 2,000 private owners without having to comply with Securities and Exchange Commission (SEC) regulations.
However, the bulk of investors will receive automatic payouts when the firm formally becomes private, which will be deposited into whichever account was used to purchase the stock.
Should I buy stock in Twitter?
Until that happens, Twitter Inc’s stock is still publicly available to trade.
And with a tender offer of $54.20 in the works, it will be tempting to many investors to purchase shares now, (while they are priced lower than that figure) in the hopes of making a quick gain.
Your tolerance for risk should determine whether or not you should buy shares in a company that may go private, and consider consulting with a professional who can assist you in weighing the benefits and drawbacks.
Stock prices could rise ahead of the tender offer, making it a money-loser for current investors.
What changes will Musk bring to Twitter?
To promote openness, Musk has said that his first plan is to make the algorithm that ranks tweets in the content feed open-source, meaning anyone would have access to it.
He has also indicated that he intends to eliminate spam bots and authenticate all legitimate users of the site.
Musk also proposes the creation of an edit button allowing users to edit their tweets once posted, and the conversion of Twitter’s San Francisco headquarters into a homeless refuge.