Five months after he paid $44 billion for Twitter, the billionaire thinks it is only worth $20 billion.
It has been a lot of fun to watch Elon Musk take over Twitter.
The same can be said about his time in charge of the microblogging site.
After a long battle with the management of Twitter 1.0 that included many twists, threats, and public insults, the deal was finalized on October 27.
On top of that, analysts thought that Musk’s $44 billion purchase price was too high because the platform wasn’t making money and didn’t make as much money from ads as its main competitors.
Musk had tried to get the price lowered, but he was unable to do so. A little over five months after he called himself the “Chief Twit,” the billionaire just cut the platform’s value by more than half.
Musk says that Twitter is only worth $20 billion right now, per Platformer and The Information. This valuation is based on the new shares that employees have been given.
If that $20 billion valuation is less than half of what Musk paid for the company, it could be a good deal for employees if the company’s value goes up. Most of the time, startups offer stock options at very low prices to get people to work for them.
The value of Twitter could be $250 billion
In an email to employees, the tech mogul is very upbeat about the platform’s future, saying that its value will go up in the next few years.
“I see a clear, but hard, path to a valuation of more than $250B,” Musk wrote.
This means that the value of new shares would be 10 times higher than their current value.
The decision to cut the valuation could be a way for Musk to keep good employees, but it also shows how bad things are at Twitter right now.
The billionaire caused some of these problems himself. Musk decided to make Twitter the safe place for conservatives. He did this by getting rid of all the safeguards that stopped false information, racism, anti-Semitism, and hate speech from spreading.
This hands-off approach to managing content has scared away a lot of advertisers. In the second quarter of 2022, the last period for which data is available, more than 91% of Twitter’s income came from advertising.
Musk has made the company private, which means he no longer has to share the company’s financial results with the public.
Musk also made the decision to cut costs by a lot, which led 5,200 employees to leave in less than three months. When Musk joined Twitter, there were 7,500 people working there. In November, he cut 50% of the jobs in one day.
A few days after these job cuts, the social network’s new owner told the people who still worked there to work long hours or quit.
“In the future, we will have to be very tough if we want to build a groundbreaking Twitter 2.0 and succeed in a world that is getting more and more competitive. This means that you will have to work hard for a long time. “Only outstanding work will earn a passing grade,” the billionaire wrote to his employees in an email on November 16.
“If you are sure you want to be a part of the new Twitter, please click yes on the link below,” he said. “Anyone who hasn’t done it by tomorrow at 5 p.m. ET will get three months’ pay.”
Assets Activities
It is actually tough to understand what feedback the lofty and amusing entrepreneur anticipated from this last offer. Much more than a 1000 staff members determined to leave behind, which led to basic disarray, pushing Musk to briefly shut workplaces of Twitter, including the base of operations in San Francisco.
For the remaining employees, the question of settlement is among one of the most necessary ones. In his email, Odor informs staff members that brand-new grants will vest over four years. The firm likewise plans to deliver cash-out possibilities to staff members. Musk vows employees they may market their inventory holdings “every six months, based upon a 3rd party evaluation” during the course of “liquidity events.”
It is actually a method the billionaire currently makes use of at his rocket and also ancillary firm SpaceX. The procedure “attains the general public company advantage of possessing a fluid equity, however without the stock price mayhem as well as suit worries of a public company, Musk wrote.
SpaceX is confidentially kept. Employees that hold reveals can sell them within the home windows given due to the business, which also calculates the complete lot of reveals that can be sold throughout these personal offerings.
In the email to Twitter workers, Odor likewise urged all of them to look at Twitter as an “inverted startup.” He insists that quantum leaps were required to avoid bankruptcy. He also duplicated this information in a tweet in which he suggested that the provider can be profitable in the 2nd one-fourth.
” Titter was actually trending to lose ~$ 3B/year (earnings reduce of ~$ 1.5 B + debt servicing of ~$ 1.5 B) and possessed $1B in money, thus merely 4 months of loan. Remarkably dire scenario,” he published on Mar. 25. “Since advertisers are actually giving back, it appears like our team will definitely break even in Q2.”
Twitter reacted along with a poop emoji to an ask for opinion. Odor had actually recently signified that this emoji will be the automatic response to media inquiries.
Musk chose to create Twitter the bastion of old guards, by removing all buffers restricting the spreading of misinformation, bigotry, anti-Semitism and hate pep talk. The various other decision Musk created was actually to dramatically reduce expenses, which led in the variation of 5,200 workers in much less than three months.
Twitter worked with 7,500 individuals when Odor got there. In his e-mail, Musk says to employees that brand-new grants will certainly vest over 4 years. Musk guarantees employees they may sell their inventory holdings “every six months, located on a 3rd event assessment” throughout “liquidity events.”
