Twitter is a popular social media platform that allows users to share and discover information through short messages called tweets. Musk initiated the acquisition of Twitter on April 14 2022 and completed it on October 27, 2022. Elon Musk bought Twitter for USD 44 billion. The deal was executed in cash.
Twitter went public in 2013 at started trading at USD 45.10 but post-acquisition it became a private entity and the stock got delisted from the exchange after the deal. Twitter was last traded on 27 Oct 2022 and closed at USD 53.70. The shareholders of Twitter were compensated $54.20 for every share held.
Since Elon Musk took over, Twitter has experienced significant layoffs, resulting in a workforce reduction from 7,500 to fewer than 2,000 employees. Additionally, Musk has been involved in several lawsuits concerning unpaid rent amounting to hundreds of thousands of dollars for Twitter’s office spaces.
On March 23, Elon Musk apparently recognized a significant decline in Twitter’s value and addressed it by providing stock grants to employees. The grants were based on a valuation of USD 20 billion for the company, which was reported in an email sent to the staff. This valuation indicated that the company was now worth less than half of what the billionaire had initially paid for it.
According to Fidelity Investment, Twitter is now worth only USD 15 billion, nearly one-third of the deal size of USD 44 billion that Elon Musk paid for the platform Twitter in 2022. After Elon Musk acquired Twitter, the asset manager, who held an equity stake in the company, reduced its valuation by over 55% towards the end of the previous year.
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Before Elon Musk acquired the platform, the financial services giant Fidelity possessed a stake in Twitter that amounted to approximately USD 20 million. However, just one month later, Fidelity evaluated the valuation and significantly reduced it. By November, Fidelity had decreased the value of its stake to USD 8.6 million. By January, the stake’s value had further declined to USD 7.8 million.
After Elon Musk’s acquisition, Twitter encountered various challenges such as the flawed launch of a subscription service and the expulsion of journalists, leading to a decline in advertiser confidence. Consequently, over half of the advertisers ceased spending on the platform, further contributing to the decrease in Twitter’s share value.
During a Twitter poll initiated by Elon Musk, over 57% of users cast their votes in favour of his resigning from his position as CEO of Twitter. To enhance revenue, Elon Musk named Linda Yaccarino, a former advertising media executive, as the new CEO recently and was expected to start her new role as CEO in June’23.
Undoubtedly, the significant decline in Twitter can be attributed to the substantial and unpredictable modifications that Musk has implemented regarding the company’s revenue strategies, workforce, and fundamental operations.
Musk also has a vision of reshaping the platform into a dominant force in the world of video, allowing the user to directly stream their content on Twitter. This strategic move aims to create competition against traditional TV news and platforms like YouTube.
Let’s observe whether Twitter managed to regain its valuation this year.