Twitter worth less than half of what I paid for it: Elon Musk memo

By Al Mayadeen English
Source: Agencies
26 Mar 2023 22:06

Calculations based on Musk's leaks show a 56% decline in Twitter's stake after several main investors left the company.

Elon Musk's photo is seen through a Twitter logo in this illustration taken October 28, 2022. (Reuters)

According to calculations based on a leaked memo from Elon Musk, Twitter is worth less than half of what the billionaire paid for it six months ago, as it lost more than $20 billion in value.

In his memo, Musk suggested to Twitter's staff that the social media company is now valued at less than $20bn. He paid $44 billion for it in October 2022.

After Musk's takeover, the company was devalued by half. Several main investors left the company, including the investment firm Fidelity, which downed the value of its stake by 56%.

Twitter's worth is measured based on Musk's offer to stock grants. Stock grants are an opportunity to incentivize employees to buy shares that cannot be sold until a specific set time, as opposed to stock options.

The aim behind stock grants is to encourage staff to reach a set valuation so that they can sell their shares for cash after a specific period of time.

The stock grants could be “sold every six months, based on a third party valuation," another separate internal email to Twitter staff said.

Musk's email also mentioned that acrimonious layoffs will come up in the company since they were running out of money. Twitter employees stand at about 2,000 after the job cuts down from 7,500, according to figures Musk put forward in December.

“I see a clear, but difficult, path to a >$250B valuation,” mentioned Musk in his latest memo to his staff, which would imply a tenfold increase in share value.

This is similar to the policy Musk, who also runs Tesla, adopted in his other company, SpaceX, where staff is allowed to sell shares back to it.

This could be a lucrative incentive if the company's value rises significantly again.