Twitter CEO Elon Musk has put the current value of Twitter at $20 billion, more than half of the $44 billion he paid for the social media platform late last year.
The current value of the social media platform was disclosed by Musk through an internal email seen by American news media.
According to reports, the email to employees addressed issues of Twitter stock compensation program and the attribution to employees of stock in X Holdings, the microblogging app umbrella company since Musk purchased it in late October.
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The valuation of the platform in the compensation plan is $20 billion, which is slightly higher than that of publicly traded companies such as Snap, the parent company of Snapchat, valued at $18.2 billion, and the social network and creative website Pinterest, valued at $18.7 billion. Notably, Twitter is not publicly traded unlike these two companies.
Twitter has been on crossroad with its finances following its acquisition by Musk. The San Francisco-based company has had to struggle to stay afloat after the $44 billion takeover deal, which was way above its actual value at the time.
Other factors, including mass exodus of advertisers, exacerbated the app’s revenue ordeal. Musk said last year that he was taking Twitter private to grow the company’s revenue – making more money for its shareholders.
In the internal email, Musk highlights the significant decrease in Twitter’s value and describes it as a brutal contraction. He also reveals that the platform encountered severe financial troubles, to the point where it was almost bankrupt.
The Tesla CEO said in a tweet on Saturday that “Twitter was trending to lose $3B/year.”
“Twitter 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,” he tweeted, describing it as “extremely dire situation.”
Musk said he hopes that the return of advertisers to Twitter will change the story in near term.
“Now that advertisers are returning, it looks like we will break even in Q2,” he said.
Musk has created a new avenue to generate revenue for Twitter. Following cost-cutting measures that have seen the company cut workforce from 7,500 to fewer than 2,000 employees, he announced the monetization of the verification marks, charging $7 to $11 per account.
Musk hopes that Twitter has passed the worst of financial woes. He said in the email that he sees a “clear but difficult path” to a valuation of $250 billion.
In the stock compensation programme, Musk said that Twitter would allow employees of the social network to cash in shares every six months.
However, he did not say how long the projected $250 billion valuation would take. Analysts believe that Twitter’s new revenue stream will take some time to yield the needed result and the possibility of total return of advertisers to the platform is not certain.