Billionaire Elon Musk’s takeover of Twitter has resulted in tarnishing the image of the social media platform and drastically diminishing its value. Since Musk bought Twitter in October 2022, at a steep valuation of $44 billion, Twitter has lost nearly 50% of its value, as disclosed by one of the company’s official letters.
The Wall Street Journal reported that Twitter is offering employees new stock grants that value the microblogging site at roughly $20 billion. These grants will begin to vest after six months and continue for up to four years. Moreover, the company is planning a liquidity event roughly a year from now to enable employees to liquidate some of their grants, the email said. Twitter has in the past offered equity grants as compensation to employees based on their performance.
A slew of challenges related to staff reduction, cost-cutting measures, firing top executives, and high-profile executive departures have led the company into serious trouble. So much so that just two weeks after buying Twitter, Musk warned employees of a possible bankruptcy in November 2022. A major hit to Twitter’s revenues came from advertisers’ withdrawal from the platform as they stumbled with Musk’s content moderation stance.
Despite the shortcomings, Musk remains optimistic about Twitter’s future. As per the email, Musk views Twitter as becoming a >$250 billion valuation company. Thus, it is implied that the stock grants currently valued at $20 billion would increase tenfold in value over time. Musk also cited the quick turnaround changes at Twitter that could be viewed as an “inverse startup” experience.
Twitter’s Source Code Leak
While Musk is struggling to keep Twitter alive, there has been a leak of the computer source code that is used to run Twitter, as per a CNBC report. The company has subpoenaed the software collaboration platform, GitHub, on which parts of the code were leaked without permission. On request, GitHub removed the post immediately, but Musk is desperate to know who may have leaked it and who all would have already learned of the code. The company called the information “proprietary source code for Twitter’s platform and internal tools.”
Is Twitter Still Weighing In on Tesla?
Musk’s Twitter buyout has weighed on his other venture, electric vehicle (EV) maker Tesla (NASDAQ:TSLA). Musk sold Tesla shares to fund his purchase of Twitter, and shareholders worry that the CEO will remain distracted because of the several issues boiling at the microblogging site.
TSLA stock is down about 11.5% since October 2022. Having said that, the stock has zoomed 76% so far in 2023, owing to heightened demand for its EVs induced by price cuts, and cost-cutting efforts.
Meanwhile, Tesla has a Moderate Buy consensus rating on TipRanks. This is based on 20 Buys, ten Holds, and three Sell ratings. Further, the average Tesla price forecast of $212.89 implies 11.8% upside potential from current levels.
