ELON MUSK IS LOSING ENORMOUS SUMS OVER TWITTER

Elon Musk has put a $20 billion valuation on Twitter – down over half of the $44 billion that the Tesla CEO paid to take the company private last year, according to a report from The Information.

• In a memo shared with the staff, which was viewed by The New York Times and Platformer’s Zoë Schiffer, Musk has offered a new stock compensation program to his employees based on this $20 billion valuation.
• Musk wrote that the company is being “reshaped rapidly,” all in lieu of the “clear but difficult path” that he sees to a $250 billion valuation for the company.
• The CEO added that Twitter could be thought of as an “inverse startup,” presumably referencing the money struggles and large layoffs.

Musk previously admitted to “obviously overpaying” for Twitter at a price of $54.20 per share, giving the company its previous $44 billion valuation.

• Since Elon Musk took the company private, Twitter has been under no obligation to announce its financials. However, the billionaire has suggested that the company has managed to delay its bankruptcy, without presenting any clear numbers.
• The company has struggled to keep advertisers on the platform and has seen a “massive drop in revenue,” with the company losing over $4 million a day at one point.
• Fidelity, one of the co-investors that backed Musk in his acquisition of Twitter, slashed their Twitter stake by 56 percent in November, according to a monthly disclosure.

Dwindling financials have made the CEO take some drastic measures to cut costs.

As investors fail to ride along with the acquisition, the company has been sued for non-payment to landlords, a consulting firm, and a private jet transportation provider among others.

• Musk has cut the company’s workforce from about 7,500 employees to a mere 2,000 since his acquisition to mitigate these losses, which has led to the site suffering from frequent issues.
• As the company racks up billions in debt, Musk has brought around radical changes such as the Blue and Gold verification subscriptions, which itself opened another can of worms.

The employees will be receiving stock in X Corporation, the holding company that he used to acquire Twitter, according to the memo.

• Just like SpaceX, another one of Musk’s companies, the employees will reportedly be allowed to sell the stock every six months.
• While the incentive could be as lucrative as SpaceX’s offering if the company achieves the astronomical rise in valuation Musk wishes, it’s possible only if things go according to plans.

The new valuation is a hint of the challenges that Twitter faces as the company is losing its main source of revenue – as the company has reportedly lost over half of its top 1,000 advertisers.