Elon Musk Values Twitter at $20 Billion After Buying it For $44 Billion
Elon Musk, the CEO of Twitter, has reportedly issued stock grants to the company’s staff at a valuation of close to $20 billion.
The price is only half of what he paid for Twitter in October 2022, when he shelled out $44 billion to buy the microblogging platform, according to multiple media sources on Saturday.
“Musk sent Twitter employees an email about the state of Twitter 2.0. He acknowledged the company has been through a period of radical change, but said the changes were necessary… Because Twitter was previously about 4 months away from running out of money.” Zoe Schiffer, a tech journalist, tweeted on Saturday.
“Comp increases will be based on X Corp stock. Current grants are based on a $20 billion valuation. Musk says he sees a ‘clear but difficult path’ to $250 billion valuation, which would mean current grants could 10x. Musk says Twitter is on the path of an inverse startup.” she wrote in the thread of comments.
Twitter’s value has dropped significantly since the acquisition, but it is still far higher than Twitter’s competitors’ public market valuation levels, according to a report by The information.
The site has lost advertisers as a result of the Musk-mandated reinstatement of some previously banned users, an increase in antisemitic and other hate speech, broken functionality, and a botched blue check rollout that cost Eli Lilly millions of dollars.
Despite the fact that ad revenue surprisingly increased during the fourth quarter of 2022, the site has lost many users permanently, reported The Wrap.
The $20 billion valuation indicates a multiple of 11 times this year’s revenue, translating to an inferred enterprise value of $33 billion, according to The Information report. Musk has predicted that Twitter will earn less than $3 billion in revenue this year.
Musk’s takeover of Twitter
Following his takeover of Twitter, Musk said his business was losing $4 million every day. The billionaire took action to reduce staff size and fired approximately 70% of employees in order to reduce costs.
“Regarding Twitter’s reduction in force, unfortunately, there is no choice when the company is losing over $4M/day,” Musk said back then.
The amount spent on Twitter advertising in the month before, December, had decreased by 71%, said a study in January.
Following Musk’s takeover, big advertisers cut back on their spending on the social media network, which caused the fall.
In November, compared to the prior year, Twitter advertising spending fell by 55%. According to another source, Twitter’s annual income was down 40%.
The majority of Twitter’s income still comes from advertising, and after Musk took control, the top companies left in droves. Yet, Elon Musk was able to win back some sponsors by providing steep discounts. He has also implemented subscription-based verification to boost sales.
