X Corp, formerly known as Twitter, has experienced a significant decline in its valuation, dropping to $19 billion. This valuation stands at less than half of the $44 billion price tag that Elon Musk paid for the social media platform just last year.
Internal documents obtained by The Verge revealed that on Monday, X Corp awarded its employees equity in the company at the valuation of $19 billion, equivalent to $45 per share. This figure marks a substantial 55 percent decrease from the purchase price set by Elon Musk.
The documents cited that “the fair market value per share is determined by the Board of Directors based on a number of factors in a manner that complies with applicable tax rules.” Employees received a type of equity known as “restricted stock units” (RSUs). These RSUs are earned over a four-year period from their grant date and are subject to taxation as income upon a “liquidity event,” such as an IPO or sale of the company.
Notably, X Corp had previously offered its employees stock at a $20 billion valuation in March, making the subsequent drop in valuation a significant development.
In July, X Corp’s owner acknowledged that the company was still grappling with negative cash flow due to a “50 percent drop in advertising revenue plus heavy debt load.” Addressing the situation, the owner emphasized the necessity of achieving positive cash flow before considering other luxuries.
Elon Musk, known for his leadership at Tesla and SpaceX, took over the micro-blogging platform in a high-profile $44 billion acquisition in October of the previous year, which included approximately $13 billion in debt.
X Corp’s CEO, Linda Yaccarino, recently expressed optimism about the company’s financial outlook. She stated that the platform aims to turn a profit by early 2024 and may have between 200-250 million daily active users. During the Code conference, Yaccarino noted, “we have a good set of eyes on what is predictable,” and she anticipates profitability in the near future.
Additionally, Yaccarino revealed that “90 percent of the top 100 advertisers have returned to the platform in the last 12 weeks alone,” highlighting a positive trajectory for the company’s advertising revenue.
The fluctuating fortunes of X Corp underscore the challenges and opportunities facing social media platforms in a rapidly evolving digital landscape.