Well, X Is Worth a Whole Lot Less Than It Used to Be

Elon Musk paid $44B for the company formerly known as Twitter, which says it's now worth $19B
By Evann Gastaldo,  Newser Staff
Posted Oct 31, 2023 2:30 AM CDT
X Says Value Has Decreased 55%
A pile of characters removed from a sign on the Twitter headquarters building are seen in San Francisco, Monday, July 24, 2023. One year ago, Elon Musk began transforming the social media platform into what is now known as X.   (AP Photo/Godofredo A.V?squez, File)

Elon Musk paid $44 billion to purchase Twitter a year ago. It's now valuing itself at about $19 billion, a 55% decrease from the amount he paid, according to stock grants handed out to employees Monday and shown to the New York Times. Musk has long said he overpaid. The Times points out that the company's share price has apparently not dropped by the same percentage as its valuation, or possibly X altered how many shares are outstanding. As it explains, the paperwork for the new stock grants says that "equity would be offered at $45 a share in the form of restricted stock units, which employees can earn over time. Employees will still be paid in cash in the amount of $54.20 for any outstanding shares that were granted to them under previous management." That's the amount per share Musk paid for the site. The employee equity compensation plan was first reported by Fortune.

TechCrunch has a helpful explainer on why the drop in valuation would be so steep. It notes, "When private companies offer stock-like compensation options, the IRS advises companies to use a 409A valuation, an independent assessment of how much a company is worth. But these valuations tend to skew more conservative than a valuation inferred via new venture funding, for example. Because of this, it's not uncommon to see companies' valuations get slashed after a new 409A appraisal." So while the appraisal might not be as alarming as it sounds, and may even "benefit employees in the short-term," TC notes, "the platform will still need to recoup its lost value if its 'hardcore' employees will get an eventual windfall." (More Elon Musk stories.)

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