[vc_row][vc_column][vc_column_text dp_text_size=”size-4″]It was widely acknowledged that Twitter’s $44 billion valuation, at the time when Elon Musk acquired it a year ago, was inflated. Presently, the company’s worth has plummeted by more than 50% to a mere $19 billion.
According to internal documents seen by The Verge, on Monday, X employees were granted equity in the company at a valuation of $19 billion, equivalent to $45 per share. This valuation signifies a 55% reduction from Musk’s original purchase price.
The documents specify that:
- The fair market value per share is established by the Board of Directors, adhering to applicable tax regulations.
- Musk is the current chairman of X, yet a formal board of directors has not been established, despite a year having passed since his takeover.
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Since Elon Musk took the reins at Twitter, he has consistently expressed his desire to structure the company’s compensation plan akin to that of SpaceX. Even though SpaceX is privately held, it allows its employees to periodically convert some of their shares into cash by selling them to external investors.
The equity granted to X employees is referred to as “restricted stock units” or RSUs. These RSUs accrue over a four-year period from their initial allocation and become subject to taxation as income upon the occurrence of a “liquidity event,” such as an IPO or the company’s sale, as detailed in internal documents.
Until now, X employees lacked a clear understanding of the company’s value following Elon Musk’s acquisition. The recent disclosure of stock award details has finally provided an answer to this lingering question. Nonetheless, it appears 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.[/vc_column_text][/vc_column][/vc_row]
