Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
Social media platform X, formerly known as Twitter, is now valued at $19bn, the company told employees, marking a steep drop from the $44bn price that Elon Musk paid when he bought it just over a year ago.
In an internal note sent to staffers on Monday, the company said it was awarding equity, or restricted stock units, to employees at $45 a share, according to two people familiar with the matter. Based on the employee equity plan, that gives it a valuation of $19bn, the document said.
The new valuation, first reported by Fortune, comes a year after Musk, the billionaire entrepreneur and Tesla chief executive, acquired the company in October 2022, agreeing to pay $54.20 a share just before a tech stock sell-off.
The banks that helped finance the deal — Morgan Stanley, Bank of America, Barclays, MUFG, BNP Paribas, Mizuho and Société Générale — have been stuck with roughly $13bn of debt tied to the acquisition, and are nursing paper losses as the company’s value has plummeted. In late March, Musk offered Twitter employees stock awards based on a valuation of about $20bn at the time, according to The Information.
X has struggled to bring in revenues after many marketers pulled their ad dollars last year, citing concerns over Musk’s decision to relax moderation on the platform due to his free speech ideals.
Despite embarking on a dramatic cost-cutting drive and reducing headcount by more than 80 per cent to 1,500, Musk said in July that the company was “still negative cash flow” due to a drop in advertising revenue of about 50 per cent “plus heavy debt load”.
X has been attempting to woo back advertisers and diversify revenues into areas such as subscriptions. At an all-hands meeting last week, Musk and X chief executive Linda Yaccarino told staff of plans to invest in facilitating payments and offering financial services via the platform in a challenge to the banking sector.
On a call with bankers in October, Yaccarino said that revenues grew in the high-single digit percentage in the third quarter compared with the previous quarter, according to one person who listened to the call. She also said she hoped that X, which has 245mn daily active users, would be turning a profit by early 2024.
Read the full article here
