Elon Musk’s Investment in X Drops to Less Than Half of What He Paid for Twitter
The platform, previously recognized as Twitter, is now valued at less than half of the amount Elon Musk had paid for it a year ago.
The restricted stock units granted to employees value the company at $19 billion, or $45 a share, according to a person familiar with the matter. A year ago, Musk bought Twitter Inc. for $44 billion.
After the takeover, most of Twitter’s staff were fired or resigned. Musk renamed the company X, changed some of its content rules, and lost more than half of its advertising revenue.
Fortune previously reported the valuation, citing an internal memo.
The company has struggled financially under Musk’s ownership. At the time of the purchase, Twitter was valued at $44 billion based on a mix of debt and equity. Musk’s purchase left the company with $13 billion in debt, and over time, his unpredictable decision-making and looser content security rules have alienated advertisers, contributing to a 60 percent drop in sales. X also owes about $1.2 billion in annual interest payments, Bloomberg previously estimated.
Musk’s plan for X is to move from advertising to paid subscriptions. But so far, the company has gotten less than 1 percent of users to sign up for the monthly premium service, which translates to less than $120 million a year, Bloomberg has estimated.
Musk has also talked about turning X into an “everything app” that could generate revenue from features like shopping and payments. The company rolled out voice and video calls earlier this month, has a beta version of a hiring service, and announced plans to launch a news channel. Musk told his employees that X plans to compete with Google’s YouTube, Microsoft Corp.’s LinkedIn and Cision’s PR Newswire.
When CEO Linda Yaccarino met with bankers this month to hammer out the company’s financing plan, she shared ideas about X’s new products and services, including launching ad tiers. Musk has previously hinted that he would like to take X public, but the company’s steep drop in value could make that difficult.
