A little over a year ago, Elon Musk’s acquisition of Twitter raised eyebrows across the tech industry. The initial $44 billion price tag seemed exorbitant to many observers, and skepticism loomed large. In the dynamic tech industry, valuations often serve as a benchmark for a company’s success and potential. One such stunning valuation that caught the attention of industry experts and investors alike, is the valuation of X.
As of today, Musk has offered his own valuation of the social media giant, and it’s a far cry from his initial investment, pegging Twitter’s worth at $19 billion.
X Valuation: Twitter’s Fall From Grace
This reevaluation of Twitter’s value comes as employees at the company received a slice of the pie in the form of equity, indicating a valuation of $19 billion, or $45 per share. X’s new valuation represents a substantial 55 percent markdown from the initial purchase price, as disclosed in internal documents that were recently uncovered by The Verge. It’s worth noting that the documents specify that this figure is determined by the Board of Directors, adhering to tax regulations. Elon Musk, Twitter’s chair, has yet to establish a formal board since his takeover.
Musk’s stewardship of Twitter has been marked by an intention to replicate the compensation model he’s employed at SpaceX, another of his companies.
SpaceX, though privately held, allows its employees to periodically convert a portion of their shares into cash through external investors. In the case of Twitter, the equity distributed to employees takes the form of restricted stock units (RSUs).
These RSUs are acquired over a four-year period from their grant date and are subject to taxation as income upon a “liquidity event,” such as an IPO or the sale of the company, as outlined in the internal documents. Fortune had previously reported the current valuation of Twitter (self-assessed value) at $19 billion.
Until now, Twitter’s workforce operated in the dark about the actual valuation of the company following Musk’s acquisition. With the recent stock award information, this long standing ambiguity has been put to rest. However, it appears that Musk’s revised valuation may still be deemed generous, as one of his major investors, Fidelity Investments, believes that Twitter is worth a substantial 65 percent less than what Musk paid for it.
This latest development has left the tech world eager for more insight into Twitter’s new stock plan.
As the platform’s value undergoes radical fluctuations, its future trajectory becomes increasingly uncertain. It’s clear that the platform’s value is a subject of contention.
The transformation of Twitter’s value from $44 billion to $19 billion raises questions about its long-term prospects and potential strategic shifts.
What lies ahead for Twitter? How will Elon Musk navigate this altered financial landscape, and how will it impact the social media giant’s user base and profitability? As investors and industry experts closely monitor the situation, stay tuned for more updates.
