A year has passed since Elon Musk acquired Twitter for an eye-watering $44 billion. In an unexpected turn of events, the social media giant has recently undergone a rebranding, emerging as X, and Musk’s perception of its value has shifted significantly.
While the initial price tag was steep, Musk now places X’s valuation at $19 billion. This drastic reduction is causing quite a stir in the tech world.
On a recent Monday, internal documents leaked to The Verge disclosed that X had awarded its employees equity at a valuation of $19 billion, with each share priced at $45. This valuation marks a 55 percent reduction from Musk’s original purchase price, as outlined in the documents. It’s important to note that the fair market value per share is determined by X’s Board of Directors, based on various factors and in compliance with tax regulations. Elon Musk serves as the chair of X and has not yet established a formal board.
Since taking the helm at Twitter, Musk has expressed his desire to emulate SpaceX’s compensation model for X. SpaceX is privately held, like X, but allows its employees to periodically cash out a portion of their shares to external investors.
In this context, X is providing its employees with restricted stock units (RSUs). These RSUs are earned over four years from their grant date and are subject to taxation as income only when a “liquidity event” occurs, such as an IPO or the sale of the company. This recent development regarding X’s valuation confirms that the company is now assessing its worth at $19 billion, as initially reported by Fortune.
For the past year, employees at X have been working in relative uncertainty regarding the company’s true value following Musk’s acquisition. The disclosure of this stock award information finally provides clarity in this regard. However, some speculate that Musk’s valuation may still be on the generous side, particularly in the eyes of major investor Fidelity, which believes X is worth 65 percent less than its acquisition price.
The reduction in X’s valuation may raise questions about the future of the platform under Musk’s leadership. It’s worth noting that Twitter, now X, plays a significant role in shaping public discourse, with millions of users relying on the platform for information and communication. The shift in valuation might prompt a reevaluation of the company’s long-term strategy, its ability to generate revenue, and its overall place in the tech industry.
The rebranding of Twitter to X signifies a significant shift in focus and direction. It remains to be seen how the company will adapt and evolve under Musk’s guidance and with the altered valuation. X’s ability to compete with other social media giants and maintain its relevance in the fast-paced digital landscape will be closely monitored.
In conclusion, the recent revelation of X’s $19 billion valuation, a stark contrast to its $44 billion acquisition price a year ago, has sent ripples through the tech world. Elon Musk’s decision to provide equity to X employees at this reduced valuation raises important questions about the company’s future, its competitive position in the market and the direction Musk plans to take the platform. Only time will tell how X, the former Twitter, will navigate this new chapter in its journey.
