X, formerly known as Twitter, is now worth less than half of what Elon Musk paid for it a year ago, according to recent reports. The company’s value is estimated to be $19 billion, or $45 a share, based on restricted stock units awarded to employees. This is a significant drop from the $44 billion price tag that Musk paid for Twitter Inc. last year.
Since the acquisition, there have been significant changes within the company. Many of Twitter’s staff members were laid off or resigned, and Musk rebranded the platform as X. He also implemented new content rules, which resulted in a loss of more than half of its advertising revenue.
Fortune magazine reported on the valuation, citing an internal memo. The financial struggles under Musk’s ownership have been apparent. The $44 billion takeover burdened the company with $13 billion in debt. Moreover, Musk’s decision-making and relaxed content-safety rules have driven away advertisers, leading to a 60% decline in sales. X is also facing approximately $1.2 billion in annual interest payments on its debt.
Musk’s vision for X involves a shift towards paid subscriptions, aiming to move away from relying solely on advertising revenue. However, the company has struggled to convince users to sign up for its monthly premium service, with less than 1% of users subscribing. Bloomberg estimates that this translates to less than $120 million in annual revenue.
In addition to the subscription model, Musk has plans to turn X into an “everything app” by introducing features like shopping and payments. The company recently launched audio and video calling, has a beta version of a hiring service, and announced its intention to launch a news wire. Musk envisions X competing with giants like Google’s YouTube, Microsoft Corp.’s LinkedIn, and Cision’s PR Newswire.
These developments highlight the challenges faced by X under Musk’s ownership. The company’s value has plummeted, and its financial struggles are evident. However, Musk remains determined to transform X into a successful and diversified platform.
