In a surprise turn of events, the popular social media platform X (formerly known as Twitter) witnessed a substantial decline in its value following Elon Musk’s acquisition a year back.
According to a New York Times report, the social media giant recently handed out stock grants to employees that proved that the company value stands at $19 billion, coming down around 55 per cent from the $44 billion value that Musk had paid to purchase the firm. Notably, this comes months after Musk had already admitted that he overpaid for the social network.
Earlier in March this year, he also wrote an email to his employees stating that he believed that the company was worth $20 billion, calling it an “inverse startup.”
Twitter’s value drops while its share values remain intact
Speaking about the recent paperwork accessed by the publication regarding the new stock grants, X said that equity will be offered at $45 per share in the form of restricted stock units which employees can earn over time. Further, the employees will be also paid cash in the amount of $54.20 for any outstanding shares that were granted to them under the previous management.
However, it still remains unclear why the stock price has not dropped by the same percentage as the company’s valuation. According to a Fortune report on the company’s valuation, the company has lost 90 per cent of its value and could be just worth $4 billion, as stated by Musk through his own math.
In a head-spinning attack on the Anti-Defamation League, the Jewish-led organization civil rights organization, Musk in his post held ADL responsible for most of the company’s revenue loss. “I don’t see any scenario where they’re responsible for less than 10% of the value destruction, so around $4 billion.” he wrote.
Elon Musk admits overpaying
While it has been almost a year since the billionaire took over the social media platform, Musk has brought several major changes to the company as well as the platform. From laying off around 7,500 of its employees to changing the platform’s service’s verification process and content-moderation rules, a lot of things have changed in the course of time.
Advertising which is said to be the company’s major source of revenue also witnessed a major drop, causing the cash flow to remain negative in August 2023.
Prior to that, Musk himself admitted a shocking drop of 50 per cent in advertising revenue in November 2022.
While addressing Tesla’s earnings call last year, the billionaire added, “Although obviously myself and the other investors are obviously overpaying for Twitter right now, the long-term potential for Twitter in my view is an order of magnitude greater than its current value.”
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