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Elon Musk told Twitter employees that the company is currently worth about $20 billion, less than half what he paid. The New York Times reported that Musk provided a figure of $20 billion in an email sent to staff on Friday to announce a new stock compensation program.
“Twitter employees will receive shares in X Corporation, the holding company from which he acquired the company, according to Musk’s email about the new stock reward program. Granted below, Musk also emailed that he believes Twitter will one day be worth $250 billion,” the NYT article said.
“Twitter was still in a precarious financial position, and at one point warned employees that it had taken four months to run out of money,” Musk said in the article. Musk’s emails reportedly said bankruptcy was averted thanks to “fundamental changes” he made, including job cuts that cut the company’s workforce from about 7,500 to below his 2,000. It is said that it was done.
Musk’s email told employees that Twitter could be “think of it as an inverted startup,” apparently referring to significant job cuts, The Information reported. According to an article in The Information, Musk “sees a clear but bumpy path” for future valuations above his $250 billion. The news site also provides details about stock offers to employees.
Musk told employees he aims to hold “liquidity events” where employees can sell shares for cash “based on third-party evaluations” every six months. He said it closely models how his rocket company, SpaceX, works, and “I think it achieves the public company advantage of having a liquid stock. But there will be no disruption to the public company’s stock price or the burden of litigation.”
Musk said in February that he had saved Twitter from bankruptcy. Meanwhile, the company has been hit with a series of lawsuits from vendors and property owners alleging that Twitter has not paid its fees. Twitter’s advertising revenue plummeted after the Musk acquisition, and subscription revenue for its revamped Twitter Blue service got off to a slow start.
Musk paid a premium but fell in value after the acquisition
Musk paid Twitter $44 billion, but that doesn’t mean it was worth it when the deal closed in late October 2022. The April 1 closing was just before Twitter’s share price rose dramatically in response to Musk revealing he had already bought 9.2% of the company.
Twitter’s actual value may have plummeted in the months that followed as Musk tried to get out of the deal and repeated claims that Twitter provided false data to the government about the number of spam or fake user accounts. I have. Twitter had to sue Musk to enforce the merger agreement, but he gave up when it became clear that he would lose in court. When the acquisition closed, its stock price was near $54.20, which was expected as the closing of the transaction resulted in a payment to shareholders.
Still, Musk’s emails aren’t the only indication that Twitter’s value has plummeted since he bought the company. “Fidelity has lost more than 60% of the value of Twitter shares since Elon Musk bought the company in late October,” Axios reported on Jan. 29.
An Information article suggests that the $20 billion valuation may be generous. “Musk felt constrained from lowering Twitter’s valuation any further after outside investors who backed his bid, including Andreessen Horowitz and Sequoia, bought shares at the acquisition’s valuation of $44 billion. may be,” the article said.
Musk reportedly used $13 billion in debt to finance the acquisition, resulting in annual interest payments of $1.5 billion. The banks that funded Musk have reportedly failed to sell their debt to outside investors.
