Valuation of X Corp Drops to $19 Billion
San Francisco, Oct 31 (IANS) ★X Corp, formerly known as Twitter, has seen its valuation drop to $19 billion, which is less than half of what Elon Musk bought the social media platform for last year. This news comes as employees at X were awarded equity in the company at a valuation of $19 billion, according to internal documents obtained by The Verge. The price per share in this equity offering is $45, representing a significant 55% drop from Musk’s original purchase price.
Restricted Stock Units Granted to X Employees
The equity being granted to X employees is in the form of “restricted stock units” (RSUs). These RSUs are earned over a period of four years from the grant date and will be taxed as income upon a “liquidity event” such as an IPO or sale of the company. This is not the first time X has offered equity to its employees, as the company previously offered stock in March at a $20 billion valuation.
Challenges Faced by X
X has been facing financial challenges, as the company is still experiencing negative cash flow due to a 50% drop in advertising revenue and a heavy debt load. The company’s CEO, Linda Yaccarino, has stated that X needs to reach positive cash flow before considering any other luxuries.
Elon Musk’s Acquisition and Future Outlook
Elon Musk acquired X in a $44 billion acquisition last year, which included approximately $13 billion in debt. Despite the challenges, Yaccarino believes that X will be profitable by early 2024 and expects the platform to have 200-250 million daily active users. She noted that 90% of the top 100 advertisers have returned to the platform in the last 12 weeks, with a total of 1,700 advertisers returning.
In conclusion, X Corp’s valuation has dropped to $19 billion, causing a significant decrease from Elon Musk’s purchase price. The company is facing financial challenges but aims to achieve profitability in the near future. Despite the obstacles, X remains optimistic about its future prospects.
News Summary:
- X Corp’s valuation drops to $19 billion, less than half of Elon Musk’s purchase price.
- Employees at X awarded equity at a valuation of $19 billion, representing a 55% drop from the original purchase price.
- Equity granted in the form of “restricted stock units” (RSUs) which require a liquidity event for taxation.
- X faces challenges of negative cash flow and heavy debt load.
- X CEO expects profitability by early 2024 and reports return of top advertisers to the platform.
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