Twitter is worth less than half what Elon Musk paid for it six months ago, according to calculations based on a leaked memo from the billionaire.
Musk suggested in a memo to employees of the social media company that it is now worth less than $20 billion. This compares with $44bn to be paid for it in October 2022.
The massive devaluation of the company followed Musk’s tumultuous takeover. Several large advertisers have left the platform and investment firm Fidelity, a major source of funding for Musk’s buyout of the company, has slashed the value of its stake by 56%.
Twitter’s measurement of value was based on Musk’s stock grant offer, according to Platformer and The Information, which first reported on the memo.
Commonly used as a way to encourage employees, stock grants are an opportunity to purchase shares that cannot be sold until a specified point in time, as opposed to stock options, which Can be sold at will. The objective is to encourage employees to reach a specified valuation by a point in time so that they can sell their shares for cash.
Another separate internal email to Twitter employees said the stock grants “may be sold every six months, based on third-party valuations”.
Musk’s email also said that, prior to the high-profile, acrimonious layoffs, it had taken the company about four months to run out of money.
According to figures Musk presented in December, Twitter’s workforce has been reduced from about 7,500 to about 2,000.
In his latest memo, he also told employees: “I see a clear, but difficult path to a $250B valuation,” which would mean a tenfold increase in share price.
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The memo suggests the model would be similar to the one Musk, who also runs Tesla, has adopted at his other companies SpaceX, which allows employees to sell back shares.
This can be an attractive incentive if the company’s value increases significantly, but it is not as flexible as selling a listed stock.
Source: www.theguardian.com
