Elon Musk-owned social networking platform formerly known as Twitter, has recorded a drop in valuation to $19 billion, from the $44 billion he paid for it last year.
The recent drop in X valuation shows a 55 percent drop in value from when Musk purchased the company last year in October. X’s recent valuation of $19 billion is however higher than the projected $16.9 billion that Fidelity which has a stake in the company valued in August.
Recent documentation about the platform’s stock awards disclosed that X would be providing the equity for $45 per share with employees able to accumulate restricted stock units over time. According to the company, employees who were issued shares under the previous management would still receive cash payments totaling $54.20 for those shares.
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In March this year, Musk told employees that he believed the company was worth $20 billion which he described as an “inverse start-up”.
Recall that when Musk purchased the platform for $44 billion last year, he acknowledged that he had overpaid for it, which included $33.5 billion in equity and a share price of $54.20.
During an interview with media personality Tucker Carlson in April this year, Musk admitted that the purchase of X was not currently financially smart.
Since his takeover, Musk has implemented many changes on the platform, from laying off workers to the introduction of a verified subscription feature, amongst several others.
X lost 50 of its top 100 advertisers since Musk took over. Half of its top 100 advertisers appear to no longer be advertising on the website, in the wake of Musk’s decision to “revamp” the site.
As of Nov. 21, the brands accounted for almost “$2 billion in spending on the platform since 2020, and over $750 million in advertising in 2022 alone,” adding to a general downward shift in advertising dollars.
Also, Musk’s erratic decisions have led the company to reportedly witness a 60% drop in sales.
However, despite the drop in advertisements on the platform, Musk remains optimistic about the company’s growth strategy with his plans to transform it into an “everything app”.
In a meeting organized on the first anniversary of the acquisition of the platform, Musk said, “We’re rapidly transforming the company from sort of what it was, Twitter 1.0, to the everything app with an all-inclusive feature app where you can do anything you want on our system”.
Musk envisions X as an all-encompassing financial platform that covers every aspect of users’ financial lives, from money and securities to eliminating the need for traditional bank accounts.
He also spoke about including new features to the microblogging site including dating service. With the introduction of so many features on the platform, several analysts are optimistic that the platform will see a surge in its revenue.
According to Bloomberg, Musk explained that online platforms such as YouTube, LinkedIn, and Cision PR Newswire are seen as potential competitors of the X as it Decelerates towards becoming an all-in-one app.
One year after Elon Musk bought Twitter, the company now known as X is valued at $19 billion, or less than half the $44 billion purchase price. Multiple outlets are reporting on the new valuation, citing internal emails offering employees equity at $45 a share via restricted stock units. The valuation was “determined by the Board of Directors” — in other words, Musk himself, who has not appointed a board, notes The Verge. X has had a tumultuous year: Many advertisers left due to relaxed moderation under Musk, and in July he said the company was “still negative cash flow” because of it. In a disclosure Monday, Fidelity wrote down the value of its X shares even more, by 65%. (LinkedIn)