Last year, Elon Musk purchased social media giant Twitter for $44 billion, before setting in motion a number of changes aimed at increasing revenue. According to a new memo from Musk to his employees, it isn't really working out that well (yet?), with the platform now worth less than half of what he paid for it.
The memo – first leaked to Platformer and The Information – offered stock grants to his employees. These are less flexible than stock options as they can only be sold at certain points, in this case every six months. Grants are typically used to incentivize workers into increasing the value of the company.
The price of the grants is generally set at the market price of the stock at the time the grant is offered to employees, with Musk telling employees that they can be sold at a price "based on a third party valuation”. Offering the grants meant that the company was valued. According to managing editor of Platformer Zoë Schiffer, Twitter is now valued at less than $20 billion.
The CEO told employees that Twitter is on the path of an "inverse startup", Schiffer added, and he could see a “clear but difficult path” to Twitter being valued at $250 billion in the future.
Musk has focused on Twitter Blue as a source of income over the previous reliance on advertising revenue. As of January 2023, around 290,000 people were estimated to have signed up for the $8 a month service, barely putting a dent in the amount lost from advertisers following several controversial changes to the site. According to one estimate, the service is pulling in around $27.8 million per year, far short of the $1 billion per year Musk has to make in interest payments on his loans used to purchase the company in the first place.
Pre-Musk, the company made the vast majority of its income through advertising. In Q4 2021, $1.41 billion out of its $1.57 billion revenue was made in this way. According to a report by the Wall Street Journal, earnings by the company are down around 40 percent compared to last year.
Musk is pushing ahead with his attempt to make revenue from subscriptions, currently prompting users verified pre-takeover to subscribe to Twitter Blue to keep their ticks, even though – as of April 1 – all that tick will signify is that you have $8 a month.