Elon Musk, the CEO of Twitter, has reportedly offered stock grants to the company’s staff at a valuation of close to $20 billion, The Information reported on Saturday. The valuation is only half of what he spent to acquire Twitter. Musk spent $44 billion to purchase the microblogging platform in October of last year.
The value of Twitter has decreased significantly since the acquisition, according to the report, but it is still significantly higher than Twitter’s competitors’ public market valuation levels. Due to major advertisers cutting back on their spending on the social media platform following his takeover, Elon Musk claimed in December of last year that Twitter was on track to be “roughly cash flow break-even” in 2023.
The $20 billion valuation implies a multiple of 11 times this year’s revenue, translating to an implied enterprise value of $33 billion, according to the report.
Elon Musk has predicted that Twitter will earn less than $3 billion in revenue this year.
Following his takeover of Twitter, Elon Musk claimed his business was losing $4 million every day. The billionaire took action to reduce staff size and fired nearly 70% of employees in order to reduce costs. “Regarding Twitter’s reduction in force, unfortunately, there is no choice when the company is losing over $4M/day,” he wrote then.
A research company stated in January of this year that Twitter advertising spending had decreased by 71% from the month before, December. Top advertisers cut back on their spending on the social media platform after Musk took control. The amount spent on Twitter advertisements fell by 55% in November compared to the same month the year before. According to another report, Twitter’s revenue was down 40% from the previous year.
Advertising continues to be Twitter’s main source of income, and following Musk’s takeover, the social media company saw a mass exodus of the top brands. Elon Musk was able to entice some advertisers back, though, by providing steep discounts. To support the revenue, he has also implemented subscription-based verification.
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