Musk values Twitter at $20 billion, less than half of what he paid for the platform

Musk values Twitter at $20 billion, less than half of what he paid for the platform
Elon Musk is taking a huge bath on his purchase of Twitter. Musk, who paid $44 billion for the social media site in October, now values the platform at $20 billion. This new valuation is based on equity grants that Twitter made to key employees. But Elon is not looking to divest himself of Twitter and in an email sent to employees he writes, "I see a clear, but difficult, path to a >$250B valuation." For that to happen, Twitter's valuation would have to rise by more than 10 times the current value that Musk has placed on the platform.

Of course, when it comes to Elon Musk, nothing should be taken at face value. Per The Street, Musk might have devalued Twitter in order to present key talent with equity grants that have a huge upside. This would help Twitter retain personnel that it cannot afford to lose. Morale can't be high and Musk has already let go of important Twitter employees. The new equity grants will vest over four years and will be allowed to sell their stock holdings during liquidity events "every six months, based on a third party valuation."

The number of Twitter employees has declined sharply under Musk

When Musk took over Twitter, the company had 7,500 employees which he cut in half during one day in November. Those who kept their jobs were asked to work longer days or leave the company. CNBC reported that Twitter was down to only 1,300 employees by late January. Musk himself corrected the report saying that there were approximately 2,300 active, working employees at Twitter not that Musk's corrected number was much better.

Shortly after the purge at Twitter, Mush tweeted, "Going forward, to build a breakthrough Twitter 2.0 and succeed in an increasingly competitive world, we will need to be extremely hardcore. This will mean working long hours at high intensity. Only exceptional performance will constitute a passing grade. If you are sure that you want to be part of the new Twitter, please click yes on the link below. Anyone who has not done so by 5 pm ET tomorrow will receive three months of severance."

Since Musk took over Twitter, the social media site has opened its arms to those who spread misinformation, post racist tweets, and traffic in hate speech. This can't give advertisers the peace of mind they need to continue spending on Twitter. Advertising accounted for 91% of Twitter's revenue during the second quarter of 2022, the last time period that such data is available. Since Twitter is no longer a public company, Musk no longer has to publicly release financial data.

In an email to Twitter employees, Musk urged them to look at Twitter as an "inverse startup." He said that radical changes had to be made to avoid bankruptcy and says that the company could be in the black as soon as the second quarter.

Musk has high hopes for Twitter's bottom line during the second quarter

In a tweet he posted a couple of days ago, Musk said, "T(w)itter was trending to lose ~$3B/year (revenue drop of ~$1.5B + debt servicing of ~$1.5B) and had $1B in cash, so only 4 months of money. Extremely dire situation. Now that advertisers are returning, it looks like we will break even in Q2."

Recommended Stories
Earlier this month Twitter suffered an outage. In a tweet explaining the situation, Musk called the platform "brittle." He said that "a "small API change had massive ramifications. The code stack is extremely brittle for no good reason. Will ultimately need a complete rewrite." Speaking of APIs, Musk has prevented third-party Twitter apps such as Tweetbot and Twitterrific from accessing the Twitter platform.

Tweetbot wrote in a tweet to @TwitterDev, "Tweetbot has been around for over 10 years, we've always complied with the Twitter API rules. If there's some existing rule that we need to comply with, we'd be happy to do so, if possible, But we do need to know what it is..." What is happening is that Musk wants those using a third-party Twitter app to use Twitter's own app instead.

Recommended Stories

Loading Comments...
FCC OKs Cingular\'s purchase of AT&T Wireless