$36b wipeout: Elon Musk tells staff Twitter is worth less than half what he paid for it
The value of Twitter has more than halved since Elon Musk’s $US44 billion ($66 billion) takeover in November, according to a leaked internal memo.
In an email to Twitter staff, the billionaire suggested that the social media company is now worth about $US20 billion ($30 billion) based on the value of stock awards granted to employees.
Elon Musk now controls five companies sprawling across transportation, aerospace, health, telecommunications and social media, giving him unmatched global clout.Credit:Bloomberg
The decision to write off around 55 per cent of its price tag, first reported by The Information, comes after technology valuations collapsed last year and companies, including Twitter, sacked thousands of staff as growth stalled.
Musk last year said he was “obviously overpaying” for Twitter, after agreeing to buy the company in April. He was later sued by Twitter after attempting to walk away from the deal. Musk later backed down and agreed to complete the transaction.
The billionaire has sacked more than half of Twitter’s 7,500 staff in an attempt to cut costs and has also grappled with a slump in advertiser interest.
In his latest email to employees, Musk told staff the mass job cuts had been needed with the company four months from running out of cash, Platformer, a tech newsletter, reported.
Musk said while the current stock value represented a sharp fall, the company had a “clear but difficult path” to a valuation of $US250 billion. Staff will receive grants from Musk’s holding company, X-Corporation, and have opportunities to cash out their shares.
Last year, Musk repeatedly warned employees at the social network that Twitter was at risk of bankruptcy, which he said necessitated sweeping job cuts. The company has also torn up rental agreements for many of its offices, scrapped home working and sold off office IT equipment, furniture and even coffee machines. Musk also cleared out nearly all the company’s former senior management following the takeover. He had accused former executives of censorship on the social network and of making misleading statements about the number of fake accounts on its website, something Twitter’s board denied.
In December, Musk said the company had got its expenses under control. “Twitter isn’t secure yet, just not in the fast lane to bankruptcy,” he said.
The new valuation puts Twitter close to the market capitalisation of the photo-sharing app Snap, which is valued at $US19 billion and has never made an annual profit.
Last year, Musk repeatedly warned employees at the social network that Twitter was at risk of bankruptcy, which he said necessitated sweeping job cuts.Credit:Bloomberg
The news of the writedown comes after Musk launched legal action after portions of Twitter’s source code, the backbone instructions behind the website, were leaked online.
Musk wants to identify the people behind the account which published the information on GitHub, a Microsoft-owned platform for sharing code for software development. GitHub said it took down the code on Friday at Twitter’s request. Twitter is reported to have launched an internal investigation to uncover the source of the information, The New York Times reported.
The account that leaked the data on GitHub was named “FreeSpeechEnthusiast”, an apparent dig at Musk who has attempted to boost freedom of expression on the social network.
In a legal filing, Twitter demanded GitHub “identify the alleged infringer or infringers” behind the leak of the source code under US copyright laws.
Musk has rescinded bans on thousands of blocked accounts, including Donald Trump, the former US president.
Musk has previously said he wants to make Twitter’s internal code for its social media algorithm public, so it can be checked and improved by external experts, by the end of March.
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