Elon Musk’s acquisition of Twitter a year ago saw a valuation of $44 billion, which many considered inflated. Now, the company’s value has plummeted by over 50% to $19 billion.
Based on internal documents revealed by The Verge, X employees were granted equity at the company’s $19 billion valuation, equating to $45 per share. This marks a 55% decrease from Musk’s initial purchase price.
The documents clarify that the fair market value per share is determined by the Board of Directors, adhering to applicable tax rules.
Elon Musk, who currently chairs X, has not yet established a formal board of directors despite his year-long tenure.
Change in Compensation Plan
Since taking over Twitter, Elon Musk has aimed to structure the company’s compensation plan similarly to SpaceX, allowing employees to convert shares into cash by selling them to external investors, akin to SpaceX practices.
X employees receive “restricted stock units” (RSUs) as equity, which accrue over four years and become taxable income during a “liquidity event,” such as an IPO or the company’s sale, as outlined in internal documents.
This recent disclosure finally reveals X’s post-Musk acquisition value, yet it seems Musk’s valuation may still be overly optimistic, as one major investor, Fidelity, asserts that X is worth 65% less than its acquisition price.
