X Valued at $19bn, 57% Below Acquisition Price
X is now worth $19 billion, which is less than half of what Elon Musk paid to buy it. X was acquired by Elon Musk for $44 billion in October 2022. However, the company’s value has since plummeted, and it is now worth just $19 billion.
The valuation was revealed after X employees were given stock grants on Monday. The employees were paid $45 per share whereas Elon Musk paid $54.20 a share to buy Twitter, the internal document seen by The Verge revealed.
X is offering its employees new stock grants in the form of restricted stock units (RSUs), a type of equity compensation that is granted to employees over time. Employees do not immediately receive the shares of stock, but they vest in the shares over a period of time, typically three to five years. Once the shares vest, employees can sell them or keep them.
In this case, X is providing its employees RSUs at a price of $45 per share. This is the price that employees will pay for the shares once they vest. Employees will be given in cash the amount of $54.20 for any outstanding shares that were granted to them under previous management.
It remains unclear as to why the stock price hasn’t dropped as much as the company’s worth. However, a report suggests that X has changed the number of shares outstanding. Meanwhile, according to the records, the Board of Directors assesses the fair market value per share based on a variety of variables, including applicable tax regulations. It’s important to mention that Musk is the chairman of X and has yet to create a formal board.
Until just recently, employees of the ‘X’, did not know anything regarding the company’s valuation post-acquisition. However, fresh revelations come in the form of stock disclosures which suggest that Musk’s estimate may have been somewhat over-ambitious.
“Despite Musk’s optimistic $20 billion valuation at the time of acquisition, some investors still consider the company overpriced. Unexpectedly, Musk himself also confessed to overestimating Twitter’s worth in a past email communication with his employees, dubbing the situation an “inverse start-up”.
Since Elon Musk took over Twitter and rebranded it as “X,” the platform has undergone a seismic shift. In the past year, over eighty per cent of the total staff count, equalling around 6,000 of its 7,500 employees, have either quit or were relieved from their duties, causing a significant restructuring within the company. One of Musk’s changes has been the overhauling of the platform’s verification process and content moderation rules.
Musk has also expressed interest in transforming X into an “everything app” that might earn revenue from features like shopping and payments. Earlier this month, the microblogging platform launched audio and video calling, as well as a beta version of a hiring service and plans to establish a news wire. Musk informed employees that X intends to compete with YouTube, LinkedIn, and Cision’s PR Newswire. Rwanda Gets $262m 14-Month Credit Facility from IMF