Elon Musk Unveils Twitter Valuation at $20 Billion, Sees Clear Path to $250 Valuation

Recent reports reveal that Twitter CEO Elon Musk has put the company’s valuation at $20 billion, which is a significant drop from the price he purchased the company in October last year at $44 billion.

Despite the unimpressive company’s valuation, the billionaire owner told employees that he sees a clear but difficult path to a $250 billion valuation, a hypothetical outcome that would make the company’s current stock price worth 10 times as much in the future. 

He further added that the company would allow employees to sell stock every six months, a practice that is also implemented at SpaceX, his space equipment manufacturing company. The sales of private stock would allow employees to have liquid stock but without the stock price chaos and lawsuit burdens of a public company.

Musk disclosed that radical changes including mass layoffs and cost-cutting would be carried out at the company where necessary, to avoid bankruptcy and streamline operations. The decline in the valuation of Twitter doesn’t come as a surprise owing to the fact that since Musk’s takeover of the micro-blogging platform, he has carried out a series of changes, especially in content operations which have scared off advertisers from the platform.

It would be recalled that at the start of 2023, the company’s daily revenue was reportedly down 40 percent from a year ago after more than 500 of its top advertising partners such as Audi, Pfizer, Ford, and the likes paused ads spending on the platform.

Also, concerns about an increase in hate speech on the platform after its acquisition by Musk who described himself as a “free speech absolutist” prompted advertisers to withdraw in droves. They have also been alarmed by a spate of impersonator accounts that flourished on the site after a botched relaunch of its blue tick scheme for verified users. Ever since, Twitter has remained in the grip of an advertising squeeze, after the social media platform hit a 40% drop in revenue.

Advertising is disclosed to be the main source of income for Twitter, which represents more than 85% of the company’s revenues. In 2021, advertising accounted for more than 90% of its $5.1bn in revenue. Musk perturbed by the company’s revenue decline in a bid to woo back advertisers on the platform, offered free advertisements to brands.

Musk rolled out a lucrative plan where companies who spend more than $500,000 on Twitter ads will receive a 100% match on their spending in equivalent marketing value up to $1 million. The platform also partnered with ad tech companies DoubleVerify and IAS on brand safety initiatives amid advertiser exits. These platforms will inform advertisers if their ad is placed around inappropriate content.

Investors King understands that Musk has been working tirelessly to increase Twitter’s revenue, the recently launched Twitter Blue program according to reports looks to have around 300,000 subscribers, which would mean that Twitter is currently bringing in an extra revenue of around $2.4 million per month via the program, or $7.2 million per quarter.

Known for his ambitious nature, Musk will continue to look for ways to generate more revenue for Twitter, after he recently told employees that “Twitter is being reshaped rapidly”.