In the latest turn of events, Twitter is now worth half of Elon’s investment. An internal memo and insider sources have indicated that Elon Musk’s social media platform, X (formerly Twitter), is currently valued at less than half of the price Musk paid for it a year ago. The report reveals significant changes and challenges that have affected the platform’s performance and financial standing since Musk’s takeover.
In October 2022, Elon Musk acquired X for $44 billion, but the platform’s value has since dropped significantly to approximately $19 billion. The internal document disclosed that restricted stock units (RSUs) recently granted to X employees were priced at $45 per share, indicating the current valuation of the company. Notably, this valuation is lower than the $54.20 per share that Musk paid to acquire Twitter.
X’s Current Valuation and Challenges
The Restricted Stock Units (RSUs) issued to employees represent a form of equity compensation that vests over a specific period. According to the internal memo and sources familiar with the matter, RSUs recently granted to company employees were valued at $45 per share. This valuation suggests that the entire company’s worth is approximately $19 billion. This figure represents less than half of the $44 billion that Elon Musk paid to acquire the platform on October 27, 2022.
It is unclear why X’s stock price hasn’t declined in proportion to the company’s reduced value. However, reports suggest that changes in the number of outstanding shares might have played a role in this situation. Additionally, the fair market value per share is determined by the Board of Directors, taking into account various factors, including relevant tax regulations. It’s worth noting that Elon Musk serves as the chairman of X and has not yet established a formal board for the platform.
Controversies around Elon Musk as the owner of X
While Twitter is now worth half of Elon’s investment, Musk’s tenure as the owner of X has been marked by a series of controversial decisions, including rebranding the platform and making substantial alterations to its content policies. He also implemented significant layoffs, reducing the company’s workforce by approximately 80%.
One of the notable impacts of Musk’s actions has been a nearly 20% decrease in X’s daily active user count since he assumed control. The platform’s advertiser appeal has diminished, resulting in a substantial drop in advertising revenue. Reports estimate that X has lost at least 50% of its total advertising income.
The loss in revenue has raised concerns regarding the servicing of the massive debt incurred by X. As of the current moment, the platform reportedly owes around $1.2 billion in interest payments on its approximately $13 billion in total debt.
Musk’s plan to rely more on paid user subscriptions has not been as successful as anticipated, with less than 1% of the platform’s user base opting for premium subscriptions, generating less than $120 million in annual revenue.
Positive Changes and Future Prospects
Under Elon Musk’s leadership, X has undergone substantial changes. The platform has seen an exodus of over 80% of its staff, amounting to approximately 6,000 out of 7,500 employees, leading to significant restructuring within the company. Musk’s influence is evident in his overhaul of the platform’s verification process and content moderation policies.
Although Twitter is now worth half of Elon’s investment, Musk has expressed a vision to transform X into an “everything app,” which would generate revenue through various features, including shopping and payments. The platform recently introduced audio and video calling, a beta version of a hiring service, and plans to establish a news wire. Musk has communicated his intention for X to compete with other platforms such as YouTube, LinkedIn, and Cision’s PR Newswire.
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