One year after Elon Musk’s acquisition of Twitter at a $44 billion valuation, it has been revealed that the company’s value has plummeted by more than 50%, currently standing at just $19 billion. Internal documents accessed by The Verge indicate that employees at X, the holding company for Twitter, were granted equity in the company at this lower valuation of $19 billion, which translates to $45 per share. This reduced valuation represents a substantial 55% drop from Musk’s initial purchase price.
According to the documents, the fair market value per share is determined by the Board of Directors based on various factors in compliance with applicable tax regulations. Musk, who serves as the current chairman of X, has not yet established a formal board of directors despite it being a year since he acquired the company.
Ever since Musk took control of Twitter, he has expressed his intention to structure the company’s compensation plan in a way similar to SpaceX. While SpaceX is privately held, it allows its employees to periodically convert a portion of their shares into cash by selling them to external investors.
The equity granted to X employees takes the form of “restricted stock units” (RSUs), which vest over a four-year period from their initial allocation. These RSUs become subject to taxation as income upon the occurrence of a “liquidity event,” such as an IPO or the sale of the company, as outlined in internal documents.
Until now, X employees had been uncertain about the company’s value following Elon Musk’s acquisition. The recent disclosure of the stock award details has shed light on this matter, yet it seems that Musk’s valuation may still be overly optimistic, with one of his major investors, Fidelity, asserting that X is worth 65% less than its acquisition price.
