- Kyle Chua
Elon Musk Values Twitter at $20 Billion, Less Than Half of the $44 Billion He Paid To Buy It
Elon Musk thinks the current valuation of Twitter is much less than he paid for in his high-profile acquisition deal last year.
According to an internal email obtained by The Information, the controversial billionaire values Twitter at about US$20 billion – that's less than half the US$44 billion he paid to acquire it. The measure of the social network giant's value was based on a new stock compensation program for employees.
The new program would provide employees with stock grants as a way to incentivise their hard work while pushing them to help reach a set valuation for the company. In contrast to stock options, which are more flexible, stock grants can't be sold until after a set time. That helps motivate the employees to help the company's valuation to go up as they can get more out of it when they sell their stock grants for cash.
In Twitter's case, the stock grants can only be sold every six months, said Musk in a separate internal email, and they would be based on a third-party valuation. Musk also said the program would give employees "liquid stock" that protects them from the "price chaos" of owning equity at a publicly traded company. He has the same program for employees of SpaceX, a company he also owns.
Twitter's devaluation comes after what many analysts and reports describe as a "turbulent" takeover by the Tesla CEO, characterised by mass layoffs and a large exodus of advertisers. Musk acknowledged the less-favourable situation in his email, admitting that the company had only about four months before running out of money when advertisers paused spending in October last year. The company's headcount is also significantly down from 7,500 employees to 2,000 as of December last year.
"I see a clear, but difficult, path to a >$250B valuation," said Musk, suggesting Twitter's valuation could increase more than tenfold in the future.
The valuation also comes after court filings revealed that portions of Twitter's source code were leaked online. Twitter claimed copyright infringement, demanding the code be taken down from the hosting service GitHub, where it had been posted. The code has reportedly been taken down, as of writing.
Elon Musk values Twitter at about US$20 billion – that's less than half the US$44 billion he paid to acquire it.
The measure of the social network giant's value was based on a new stock compensation program for employees.
Twitter's devaluation comes after what many analysts and reports describe as a "turbulent" takeover by the Tesla CEO, characterised by mass layoffs and a large exodus of advertisers.
Musk also admitted that the company had only about four months before running out of money when advertisers paused spending in October last year.