CEO Elon Musk allegedly admitted in an email to his employees that Twitter is now only worth $20 billion, less than half of what he paid. He also revealed that Twitter was on the verge of bankruptcy and that he had to lay off many workers and cut benefits. Arriving to define his company as a “reverse startup“.
Musk thinks Twitter is worth $20 billion, half what he paid
Twitter has been facing challenges such as content moderation, competition, user growth and profitability for years. These challenges became even more acute when Elon Musk, the billionaire behind Tesla and SpaceX, decided to abuy Twitter last October for $44 billion.
Musk had stated that he would make Twitter “the voice of the planet” and to have big plans to innovate the service. However, it seems that his plans have not worked out as he hoped. In an email sent to his employees this week found by the New York Times, Musk made a startling confession: Twitter is now worth just $20 billion, less than half of what it paid.
Musk explained that Twitter was in dire financial shape when it bought it. And that he was at risk of running out of money within four months. To save the company, Musk had to take drastic measures, such as lay off 30% of employees and cut benefits like health insurance and free meals. The CEO goes on to write that he has also changed the organizational structure of Twitter, eliminating many managerial roles and giving more autonomy to the teams.
Musk defined Twitter “a reverse start-up”, that is, a company that has to reinvent itself from scratch after achieving success. He said Twitter it needs to be more agile, creative and customer-focused to survive in a rapidly changing market.
To motivate employees to stay true to his vision, Musk announced a plan to stock compensation based on the holding company that owns Twitter. Employees will be able to sell shares every six months on the secondary market, a system similar to the one used by SpaceX.
It remains to be seen whether this recipe will work in the coming months. Or if the value will continue to halve.