X Corp, previously known as Twitter, has witnessed a substantial decline in its valuation, dropping to $19 billion – a figure now less than half of Elon Musk’s $44 billion acquisition cost just last year. The company recently granted its employees equity at this $19 billion valuation, equivalent to $45 per share, as per internal documents obtained by The Verge.
The price of these shares represents a significant 55% reduction from Musk’s initial purchase price. The valuation of these shares is determined by the company’s Board of Directors, taking into account various factors while adhering to applicable tax regulations.
Employees at X Corp are receiving “restricted stock units” (RSUs), which vest over a four-year period from the date of grant and are subject to taxation as income upon a “liquidity event,” such as an IPO or a company sale.
Notably, X Corp had previously offered its employees shares in March at a valuation of $20 billion. However, in July, the company’s owner posted that X was still grappling with negative cash flow due to a 50% decline in advertising revenue and a substantial debt burden. He emphasized the need to achieve positive cash flow before considering other investments.
Elon Musk, renowned for leading Tesla and SpaceX, acquired the micro-blogging platform for $44 billion in October the previous year, a deal that included approximately $13 billion in debt. The current CEO of X Corp, Linda Yaccarino, recently expressed confidence that the company would turn a profit by early 2024. She also highlighted the platform’s potential, suggesting it could have between 200 to 250 million daily active users.
During a speech at the Code conference, Yaccarino shared that “90% of the top 100 advertisers have returned to the platform in the last 12 weeks alone.” She further noted that around 1,700 advertisers had also come back to the platform, indicating a positive trajectory for the company.