X's value plummets to $19 billion, less than half of Elon Musk's purchase price
PTC News Desk: X, formerly known as Twitter, is now valued at $19 billion, a significant decrease from Elon Musk's $44 billion purchase just a year ago. This valuation is based on restricted stock units awarded to employees, which equate to $45 per share. Under Musk's leadership, Twitter, now X, has undergone significant changes, including a major staff reduction, content rule modifications, and a loss of over 50 per cent of its advertising revenue.
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The company's financial struggles have been apparent since Musk's takeover. While Twitter was initially valued at $44 billion, including a mix of debt and equity, Musk's acquisition added $13 billion in debt to the company. His unconventional decision-making and relaxed content safety regulations have deterred advertisers, contributing to a 60% drop in sales. X also has to manage approximately $1.2 billion in annual interest payments on its debt.
Musk's strategy for X involves a shift away from advertising and toward paid subscriptions. However, the company has had limited success, with less than 1 per cent of users signing up for its monthly premium service, translating to an estimated annual revenue of less than $120 million.
Additionally, Musk envisions X as an "everything app" with potential revenue sources from features like shopping and payments. The company has introduced audio and video calling, a beta version of a hiring service, and plans to launch a news wire. Musk has even expressed his intent to compete with giants like Google's YouTube, Microsoft Corp.'s LinkedIn, and Cision's PR Newswire.
While CEO Linda Yaccarino outlined new product and service ideas for X, including the introduction of advertising tiers, Musk has previously hinted at the possibility of taking X public. However, the company's substantial decline in value may pose challenges in realizing this aspiration.
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- With inputs from agencies
