Elon Musk appears to have significantly overpaid for the social network X (formerly Twitter): a year ago, he acquired it for $44 billion, but its current value is estimated at only $19 billion.
As reported by The Verge, according to the company's internal documents, its employees received shares based on the valuation of $19 billion - that's $45 per share. This event marked the first official confirmation of the company's value since its acquisition. The fair market value of the shares was determined by X's board of directors. However, it is worth noting that Musk, as the chairman of the board of directors, has not yet fully formed it.
It is also worth noting that when Musk bought Twitter, many analysts and experts considered the $44 billion valuation to be inflated. Musk himself seems to have shared this view. Now, he values the company at just $19 billion.
The more than 2-fold decrease in the value of X in one year raises questions not only about Musk's business strategy but also about what factors influence the value of such companies and how these factors can change in the rapidly evolving market.
When Musk acquired Twitter, he planned to implement an employee reward system similar to the one used in his other company, SpaceX, where employees can sell part of their shares to external investors. The type of stock compensation offered to X employees is called Restricted Stock Units (RSUs). RSUs are “earned” over a period of four years and only become taxable income after a specified “liquidation event” such as an IPO or sale of the company.