Allegedly, Elon Musk offered Twitter employees stock grants at a $20 billion valuation, less than half the $44 billion Musk paid for the social media platform last year. This would, in theory, offer a significant upside if the company’s value recovers. However, Twitter will generate less than $3 billion in revenue this year. Considering Twitter’s $13 billion in debt, the $20 billion valuation implies a multiple of 11 times this year’s revenue to an implied enterprise value of $33 billion.
Elon Musk said in December that Twitter is on track to be “roughly cash flow break-even” in 2023 as top advertisers slashed their spending on the social media platform after the takeover. Musk had said Twitter was losing $4 million a day. Thus, he laid off nearly 70% of the staff.
Fidelity, one of the co-investors that backed Musk’s Twitter takeover, wrote down its stake in Twitter by 56% in November, public filings show.
In a note to the staff, Musk said he was optimistic about the social-media company’s future. “I see a clear, but difficult, path to a >$250B valuation,” meaning stock granted now would be worth 10 times more, he said. WSJ reports that the company plans to offer a liquidity event roughly a year from now, in which employees can cash out some of their equity.