The value of Elon Musk’s X (formerly Twitter) has reportedly declined to less than half of its purchase price, possibly due to his chaotic leadership and advertisers’ concerns about content-safety rules on the platform.
What Happened: Musk’s acquisition of Twitter was a headline-grabbing move last year when he shelled out a whopping $44 billion. However, it appears that a stark decline in value has overshadowed the initial enthusiasm.
According to someone who knows the situation, the company’s valuation stands at $19 billion, equivalent to $45 per share, based on the restricted stock units granted to employees, reported Bloomberg.
See Also: Did Elon Musk’s X Scrap A Key Tool To Combat Election Misinformation? Here’s What We Know
The transformation of the platform under Musk’s ownership has been tumultuous.
Following the acquisition, X underwent significant changes, including a shift in content rules and substantial layoffs. These changes have resulted in losing more than half of the advertising revenue.
It was previously reported that Musk’s plans for X include transitioning away from advertising and toward paid subscriptions. While the vision is grand, the execution has faced challenges.
Currently, less than 1% of users have opted for the monthly premium service, generating less than $120 million annually.
Moreover, the financial strain on X doesn’t end there.
The acquisition deal added $13 billion in debt to the company, coupled with an annual interest payment of about $1.2 billion, the report noted.
Why It’s Important: Earlier, it was reported that the tech billionaire intends to make X an “everything app,” competing with giants like Google’s YouTube and Microsoft’s LinkedIn.
However, these plans may not go as planned, considering the plummeting value of the platform.
Meanwhile, earlier this month, it was reported that contrary to the assertions made by Musk and X CEO Linda Yaccarino, the world’s major advertisers have ceased spending on X.
This conflicts with the statements they made saying that 90% of the platform’s significant advertisers had returned.
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