Twitter's value is less than half what Elon Musk paid for

Elon Musk said on Wednesday that Twitter Inc. employees would receive stock awards based on the value of the company of about $20 billion. Compared with last year's $44 billion acquisition price, this price is less than half.

‍

In his memo to the workers, Mr. Musk expressed his optimism for the future of the social media company. He stated, "I see a clear, though tough, route to a >$250B valuation," which would make the stock awarded now worth ten times more.

‍

According to Mr. Musk's email, Twitter is changing so quickly that the company "may be thought of as an inverse startup" and that extreme adjustments were required in part to prevent Twitter from going bankrupt.

‍

The updated valuation reflects the difficulties Twitter has endured since Elon Musk took control of the company. Twitter's primary source of income was threatened when several major advertisers quit spending on the platform, though the firm has been trying to win them back.

‍

Separately, Twitter claimed in court filings that portions of its source code had been posted online, an occurrence that would cause the business to have security issues. Twitter claimed in court documents submitted on Friday that a person or organization using the handle FreeSpeechEnthusiast "uploaded numerous snippets of Twitter source code" to the website of GitHub Inc.

‍

According to the court documents and a notice published on GitHub's website, the information was removed when Twitter claimed it violated its copyright. Beyond the notification, a GitHub spokeswoman declined to comment. According to the court documents, Twitter requested that GitHub be served with a subpoena so that it could learn who leaked the information and who downloaded it.

‍

It wasn't immediately clear which portions of the code were exposed or for how long. The leak, which was first reported by the New York Times, was defined by the business in court documents as "secret source code for Twitter's platform and internal tools."

‍

One of the co-investors that supported Mr. Musk's acquisition of Twitter, Fidelity, wrote down 56% of its Twitter holdings in November, according to public documents.

‍

Twitter informed staff that it is providing additional equity grants to employees, which will begin to vest after six months, in a separate email sent late Friday that Trade Algo was able to read.

According to the email, the company intends to hold a liquidity event in around a year during which time employees will be able to cash out some of their ownership. No information was available regarding the number of employees who got equity awards.

‍

Since Mr. Musk's contentious purchase of Twitter last year, employees have had a lot of questions, including ones about compensation. According to former employees, Twitter frequently provided stock grants as part of employee pay that vested over time. At many tech organizations, stock-based pay has been a well-liked method of luring talent.

‍

Twitter's press email responded to a request for comment with a poop emoji, which Mr. Musk recently tweeted will be the company's default answer to media requests.

‍

The new grants, which are separate from and in addition to any heritage Twitter equity that was converted to cash at the time of the acquisition in October 2022, will vest over a four-year period, according to the email.

‍

According to regulatory filings, Twitter spent roughly $630 million on stock-based compensation in 2021, the last full year it publicly declared financial results before going private. That year, the corporation employed over 7,500 people full-time.

‍

Following Mr. Musk's purchase, there were several waves of layoffs and other departures; the business hasn't disclosed the precise number of employees it now has. Mr. Musk claimed in December that there were just about 2,000 employees left.

‍

According to a regulatory filing, the business stated that the stock awards given to employees will be converted into the right to receive cash at the acquisition price of $54.20 per share when Mr. Musk purchased Twitter for $44 billion in October.

‍

Yet, as a private company, Twitter's future compensation policies continued to raise concerns among the workforce.

‍

Twitter will give "quite big stock and other compensation awards, dependent on success," and staff would learn more on March 24, according to Mr. Musk.

‍

Mr. Musk had previously brought up compensation. According to an email obtained by the Trade Algo, he had informed colleagues in November that Twitter will continue to provide stock and that the plan would be comparable to what SpaceX offers. Mr. Musk stated, "Exceptional amounts of stock will be given for excellent success.”

‍

Space Exploration Technologies Corp., the official name of Elon Musk's rocket and satellite company, has long used shares as a recruiting and compensation tool. Because SpaceX is privately held, employees who own shares that are available for sale are unable to sell them as easily as shareholders who own stock in publicly traded corporations.

‍

Conversely, SpaceX occasionally extends an invitation to current and past staff members to sell their shares if they so want, providing them the opportunity to possibly monetize their ownership. Former workers have claimed that because the corporation places a cap on the total number of shares that can be sold during offers, it is not always possible for stockholders to sell all of their desired shares or pay out their shares.

‍

Gwynne Shotwell, president of SpaceX, remarked at a business gathering in February, "We have been able to give them liquidity."

‍

Because of the company's increasing value over time, current and previous employees may profit greatly if they sold. Over five times more than in 2018, when SpaceX worked on a funding round intended to value the firm at $30.5 billion, a recent offering attempted to value the company at about $140 billion.