X's valuation plummets to less than half of purchase price
What's the story
Elon Musk's X, previously known as Twitter, has experienced a significant decrease in its valuation. It is now worth less than half of what Musk initially paid for it a year ago. Employee-awarded restricted stock units now value X at $19 billion, or $45 per share, reported Bloomberg. This is a notable decline from the $44 billion valuation at the time of Musk's purchase, which consisted of both debt and equity.
Details
Ad revenue loss and struggles with subscription model
Since Musk took over, X has encountered financial challenges, losing more than 50% of its advertising revenue due to unpredictable decisions and relaxed content-safety regulations that have deterred advertisers. This has led to a 60% decline in sales. Musk's strategy to transition the platform from advertising to paid subscriptions has not been as fruitful as anticipated, with under 1% of users opting for its monthly premium service, generating less than $120 million annually, as estimated by Bloomberg.
What Next?
Future plans for X competing with tech giants
Musk has shared his vision of transforming X into an "everything app," generating income from features such as shopping and payments. The company recently introduced audio and video calling, is testing a hiring service, and plans to launch a news wire. CEO Linda Yaccarino discussed ideas for new products and services during a meeting with bankers this month, including the introduction of advertising tiers.
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