X, formerly known as Twitter, is now worth half of the $44 billion that Elon Musk paid to acquire the company.
Social media platform X, formerly known as Twitter is now worth only half of what Elon Musk paid for it one year ago, according to sources close to the matter. This new estimate of company worth is due to an examination of the restricted stock units awarded to employees. These units work out to $45 per share, which equates to a company valuation of $19 billion, less than half of the $44 billion Musk paid to acquire the site.
Revenue shortfall woes
This is hardly the first sign of trouble for the company, since Musk took over. Since then, the company has installed a new CEO, in addition to weathering storms stemming from the new verified scheme, and competition from Threads. In addition, Twitter/X has seen financial struggles as the introduction of new rules for content drove away advertisers who were previously using the platform, contributing to a 60% drop in advertising sales revenue.
Twitter reportedly lost $40M in ad revenue after two notable companies received community notes on their ads pic.twitter.com/hFDFPr00wW
— Dexerto (@Dexerto) May 17, 2023
Musk’s initial purchase of the company was made using a combination of debt and equity, but this strategy meant that Twitter/X is now saddled with $13 billion in debt. This equates to a yearly interest payment of $1.2 billion per year, as estimated by Bloomberg.
Subscribe to our newsletter for the latest updates on Esports, Gaming and more.
To meet this revenue shortfall, Musk plans to pivot towards charging users for subscription plans, including the newly announced ‘Premium+’ subscription. However uptake for this option has been low, with less than 1% of users signing up for the service. Bringing in only an estimated $120 million, nowhere near enough to make up the shortfall.
Elon Musk has been open about his ambitions to turn Twitter/X into an ‘everything app’ similar to the popular Chinese app WeChat. Features such as audio and video calls have already been introduced, with additional plans to roll out functions such as job searches and shopping later. Musk has also indicated that he would like to take X public, but its present drop in value makes this unlikely.