Elon Musk puts $20 billion value on Twitter, report says

Elon Musk puts $20 billion value on Twitter, report says:- Twitter CEO Elon Musk is offering stock grants to the social-media company’s employees at a valuation of nearly $20 billion, The Information reported on Saturday. The valuation is half the amount it paid to buy Twitter.

In October last year, Musk paid $44 billion to acquire the micro-blogging site. The report said it was an acknowledgment of how much Twitter’s value has fallen since the deal — but it is still well above public market valuation levels for Twitter’s rivals.

In December last year, Musk said Twitter was on track to be “roughly cash flow break-even” in 2023, as top advertisers slashed their spending on the social media platform following his acquisition.

The report said as Musk has projected that Twitter will generate less than $3 billion in revenue this year, and taking into account the company’s $13 billion in debt, the $20 billion valuation implies a multiple of 11 times this year’s revenue to an implied enterprise value of $33 billion.

After taking over Twitter, Musk said that his company was losing $4 million a day. To cut costs, the billionaire moved to downsize and lay off nearly 70 percent of his workforce.

“Regarding Twitter’s reduction in force, unfortunately, there is no choice when the company is losing over $4M/day,” he wrote then.

In January this year, a research firm reported that ad spending on Twitter had declined by 71 percent from the previous month in December. The decline came as top advertisers reduced their spending on the social media platform following the acquisition by Musk.

The month of November saw a 55 percent drop in Twitter ad spending as compared to the previous year. Another report states that Twitter’s revenue has been down 40 percent year-on-year.

Twitter’s primary source of revenue remains advertising and following Musk’s acquisition, the social media company saw a mass exodus of top brands.

However, Musk managed to lure some advertisers back by offering them heavy discounts. They have also introduced subscription-based verification to increase revenue.

Source: BT

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