2023-10-31 09:21:57
A year after the Twitter takeover, the value of X has fallen dramatically
Tesla boss Elon Musk paid $44 billion for Twitter 12 months ago. Now the company is no longer even worth half that, as media reports. And Musk’s subscription plans aren’t turning things around.
Elon Musk, serial entrepreneur and head of Tesla and SpaceX, is not particularly lucky with Twitter. His reaction to the loss of value: The conversion to an “app for everything” will “at some point” catapult the value of “X”, as the service is now called, to 250 billion.
Photo: Michel Euler/AP Photo (KEYSTONE)
According to media reports, Elon Musk’s online platform X is worth less than half as much as the tech billionaire paid for it under the name Twitter. When shares were allocated to employees, X was valued at a total of $19 billion, wrote Fortune magazine and the financial service Bloomberg, among others, on Monday.
At the end of October 2022, Musk paid around $44 billion for Twitter. He paid a hefty premium on the market value: over half more than the price at which he secretly bought his first shares in January, and 38 percent more than before his investment became known at the beginning of April. He has since renamed the service to X and wants to use this as a basis to build an app with more functions including financial services.
No surprise
The drastic loss in value comes as no surprise. At the end of March, the “New York Times” and the “Wall Street Journal” quoted an email from Musk to employees in which he saw the value of Twitter at $20 billion. At the same time, he also predicted that with the change to an “app for everything” there would be a jump to 250 billion at some point.
The reason for the email was the announcement of a share program for employees. The message at the time: The current shares could still become valuable if they were not sold off immediately after the holding period ended. If the company’s value is still at 19 billion, Musk’s innovations have not had a positive impact on the business.
Since the takeover, the platform has suffered a significant decline in revenue, which has always been the mainstay of Twitter’s business. Musk has said several times that they are only about half as high as they once were on Twitter. Many companies avoid X as an platform because they fear a negative environment for their brands. Musk is increasingly trying to fill the gap with subscription revenue.
The first step was to restrict how many posts free users can see per day. In the meantime, more far-reaching restrictions are being experimented with. In New Zealand and the Philippines, new users of the service can only publish posts and quote or redistribute posts from others for a fee of one US dollar per year. You can only use X passively for free: read posts, watch videos, follow other users.
The amount of subscription revenue is still open
There are now three levels of the premium subscription. It remains to be seen whether the subscription focus is financially worthwhile. It is estimated that the original $8 subscription would bring in annual revenue of around $120 million. By comparison, in its last full year as an independent company, Twitter earned $4.5 billion from and another $572 million from data licenses and other revenue.
The acquisition also weighed on Twitter and X in another way. Musk took out loans of around $13 billion for the purchase – which is now on X and for which it is estimated that around $1.2 billion in interest will be due per year.
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