Elon Musk said Twitter is now worth about $20 billion, according to an email he sent the company’s employees on Friday, a significant drop from the $44 billion that he paid to buy the social network in October.
Mr. Musk in the note to staff said he was optimistic about the social-media company’s future. “I see a clear, but difficult, path to a >$250B valuation,” meaning stock granted now would be worth 10 times more, he said
The email, which was viewed by The New York Times, was sent to employees to announce a new stock compensation program. In it, Mr. Musk warned workers that Twitter remained in a precarious financial position and, at one point, had been four months away from running out of money. He said “radical changes” at the company, including mass layoffs and cost cutting, were necessary to avoid bankruptcy and streamline operations.
“Twitter is being reshaped rapidly,” Mr. Musk wrote, adding that the company could be thought of as “an inverse start-up.”
Twitter’s value has declined as Mr. Musk has dramatically overhauled the company. In October, Mr. Musk took Twitter private, which means it is no longer obligated to provide transparency about its finances. But the billionaire has indicated publicly that the company lost revenue as advertisers fled the platform after his takeover, and suggested that Twitter was in danger of bankruptcy.
The $20 billion figure values Twitter slightly higher than Snap, the parent company of Snapchat, which has recently struggled with an advertising slump and predicted its revenue would fall. Snap, which has a market capitalization of about $18 billion, has about 375 million daily active users, compared with Twitter’s 237.8 million in the company’s final public disclosure before it went private.
Mr. Musk did not respond to a request for comment and an email to Twitter’s communications department was returned with a poop emoji. The company’s new valuation was earlier reported by The Information.
According to Mr. Musk’s email about the new stock compensation program, Twitter employees will receive stock in X Corporation, the holding company he used to buy the company. Those awards will be granted under the $20 billion valuation. Mr. Musk also said in the email that he believed Twitter could someday be worth $250 billion.
Twitter will plan to allow employees to sell the stock every six months, Mr. Musk added, akin to the practice at SpaceX, his privately held rocket manufacturer. The sales of private stock would allow employees to have “liquid stock, but without the stock price chaos and lawsuit burdens of a public company,” Mr. Musk wrote.
As noted by Schiffer, Musk adds that he sees “a clear but difficult path” to achieving a $250 billion valuation, which would eventually make Twitter’s current stock grants worth 10 times as much as they are now (if this actually ends up panning out, of course). Just like the Musk-owned SpaceX, Twitter will also reportedly let employees cash in their stock grants at specified periods
Comp increases will be based on X Corp stock. Current grants are based on a $20b valuation. Musk says he sees a “clear but difficult path” to $250 billion valuation which would mean current grants could 10x. 3/
— Zoë Schiffer (@ZoeSchiffer) March 25, 2023
As noted by Schiffer, Musk adds that he sees “a clear but difficult path” to achieving a $250 billion valuation, which would eventually make Twitter’s current stock grants worth 10 times as much as they are now (if this actually ends up panning out, of course). Just like the Musk-owned SpaceX, Twitter will also reportedly let employees cash in their stock grants at specified periods.
Additionally, Musk reportedly writes that he views Twitter as an “inverse startup” due to the whirlwind of “necessary” changes he made to the platform to save it from bankruptcy. However, the new $20 billion estimate likely reflects the challenges that emerged due to some of these radical changes, such as the new Blue with verification subscription that led to a wave of fake accounts and a “general amnesty” policy that brought back some of Twitter’s worst users.
Twitter has lost some of its biggest advertisers as a result, with a recent report from Vox indicating that over half of the top 1,000 advertisers on Twitter prior to Musk’s acquisition no longer show ads on the platform. This obviously hasn’t helped the company sort out some of its financial issues, including its mountain of debt and several unpaid bills that are allegedly owed to landlords, an advisory firm, a private jet company, and many others. Fidelity also slashed its stake in the company from $53.47 million to $23.46 million last year, while Twitter’s revenue dipped by about 40 percent year over year in December.
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