According to calculations based on a leaked memo from the billionaire, Twitter is now worth less than half of what Elon Musk paid for it six months ago after losing more than $20 billion in value.
In a note to the workforce of the social media company, Musk suggested that its current market worth is less than $20 billion. In contrast, he paid $44 billion for it in October 2022.
Following Musk’s tumultuous takeover, the company’s value has drastically decreased. A number of significant advertisers have left the platform, and Fidelity, an important investor in Musk’s acquisition of the business, has written down the value of its stake by 56%.
Platformer and the Information, who broke the news of the memo first, claim that Musk’s offer of stock grants served as the basis for determining the value of Twitter.
Stock grants, which are frequently used as a means of motivating employees, are an opportunity to purchase shares that cannot be sold until a certain point in time, as opposed to stock options, which may be more flexible depending on the restrictions that are imposed. The idea is to motivate employees to value their shares at a certain level by a certain date so they can sell them for cash.
Another other internal email sent to Twitter staff members stated that the stock grants might be “sold every six months, based on a third party valuation.”
Musk’s email also stated that the business was only four months away from running out of money before a wave of high-profile, contentious layoffs.
According to figures Musk presented in December, Twitter’s workforce has decreased from around 7,500 to around 2,000 people.
I see a clear, but difficult path to a >$250B valuation, which would imply a tenfold increase in share value, he added in his most recent memo to the staff.
According to the memo, the concept would be comparable to what Elon Musk, who also owns Tesla, has implemented at SpaceX, another one of his businesses, which permits employees to buy back shares in the company.
If the company’s value increases significantly, this can be a lucrative incentive, but it is less flexible than selling a listed stock.
(Adapted from WionNews.com)