Billionaire Elon Musk’s X, formerly known as Twitter, is now valued at less than half of what he purchased it for a year ago. The company, which has been controversial for its content policies and lack of revenue, is now being internally valuated at $19 billion, reports multiple news organizations. This valuation is based on an offer of restricted stock units (RSUs) to employees that will mature over four years. In March, X was offered RSUs at a $20 billion valuation, and employees are now being told that those shares have been revalued to $19 billion, according to screenshots cited by Fortune.
This drop in value is significant for a social media platform that has struggled to generate advertising revenues. The decline has come as the company has relaxed moderation on the platform in the name of free speech, and marketers have withdrawn their advertising dollars. It also comes as X makes moves to charge users a monthly fee to combat bots.
While X has been trying to boost its revenue by offering premium subscriptions, the company still trails significant competitors such as Facebook and Instagram for traffic. Earlier this year, the company reported that its cash flow was negative.
Despite these problems, the company is still making some positive changes. In July, the company announced it would distribute ad revenue to its creators, who produce original tweets and videos for X. The move is a significant shift for the company, which has traditionally relied on advertising to generate revenue. It could signal that the company is shifting its focus away from ad-based growth strategies.
However, it’s unclear whether these efforts will be enough to turn the company around. The latest snafu came when the company fired its chief creative officer, Laura Yaccarino, over a controversial tweet about the Anti-Defamation League (ADL), which the ADL said promoted virulently anti-Semitic views on its platform. The firing was viewed as an attempt to silence criticism of the ADL’s content policy, and it caused the company to lose millions in revenue.
The latest blow to the company is another reminder that X is in trouble. The CEO of Tesla and Space X has previously acknowledged that he overpaid for Twitter, which he bought for $44 billion, including $33.5 billion in equity. This new valuation for X means that the social media giant is now worth about half what it was purchased for and is likely not even as profitable as Twitter’s peak. This has led some investors to call for the company to be taken off public markets, but it’s unclear whether that will happen. The company is still mainly in debt, so it will have to work hard to regain its previous luster and attract advertisers again. This may be impossible without a significant change in the platform’s policies. Regardless, the company will need to do much more than offer higher-priced subscriptions to users.
