Elon Musk’s Influence Causes Significant Decrease in X’s Valuation

Elon Musk’s acquisition of the social media platform X, formerly known as Twitter, has resulted in a significant drop in its valuation. Musk purchased the platform for $44 billion, including $33.5 billion in equity, but its current value stands at $19 billion, marking a decrease of nearly 55%. This information was reported by the New York Times.

Recent documentation regarding stock awards revealed that X would offer equity at a price of $45 per share, allowing employees to accumulate restricted stock units over time. The company confirmed that employees who received shares under the previous management would still receive cash payments totaling $54.20 for those shares. However, it remains unclear why the share price has not decreased in line with the company’s reduced worth.

In March of this year, Musk informed X employees that he believed the company’s value was $20 billion and referred to it as an “inverse start-up.”

Since taking over Twitter a year ago, Musk has implemented significant changes to both the business and the social media network. He initiated a global layoff of around 7,500 employees, revised content-moderation guidelines, and introduced a paid verification process. Furthermore, the company experienced a substantial drop in advertising revenue, leading to negative cash flow in August 2023 and a heavy debt burden.

Despite these challenges, Musk remains optimistic about the company’s growth strategy and its transformation into an “everything app.” During a meeting commemorating the acquisition’s first anniversary, Musk stated, “We’re rapidly transforming the company from what it was, Twitter 1.0, to an all-inclusive feature app where you can basically do anything you want on our system.” He also mentioned plans to introduce new features, such as a dating service, to the microblogging site.

Although Musk and CEO Linda Yaccarino were not physically present at the company headquarters, they lauded the employees for their contributions to the company’s rebranding and the launch of new features. These initiatives include a revenue share program for creators, video calls in direct messages, and improved live streaming quality.