In an email to Twitter employees last Friday, CEO Elon Musk said the company’s value had dropped to about $20 billion.
This amount is significantly lower than the $44 billion that Musk spent to acquire the company last October — an over-evaluation, he felt at the time, per The Wall Street Journal.
Investors seeking ownership stakes helped Musk pay for it, alongside a $12.5 billion loan from a group of banks that included Morgan Stanley and Bank of America.
Musk subsequently made the company private, delisting it from the New York Stock Exchange and making sweeping layoffs, starting with the executives.
He also made several other changes to the platform — such as overhauling its blue check verification system — that brought him under fire and lost him a number of advertisers as well as revenue.
Musk’s disclosure about Twitter’s current financial situation came alongside an announcement that the company would undergo significant changes to avoid bankruptcy.
Noting that it would now be like “an inverse start-up,” Musk wrote in the email that a new stock compensation program would be launched, per The New York Times. It will reportedly resemble that seen at another of Musk’s companies, SpaceX, which manufactures rockets.
Before Musk’s purchase of the company, Twitter used to offer stock grants as part of employees’ compensation, per the WSJ. These would vest over several years.
This new stock will be for X Corporation, the holding company Musk used to buy the company.
In the new stock compensation program, the new equity grants will start to vest after six months, at which point employees would be able to sell them.
Musk had hinted at this program in February, saying in an email that “very significant stock and other compensation awards” would be “based on performance,” per the WSJ.
Right now, awards will be granted under the $20 billion valuation and therefore 55% less than legacy Twitter stocks, according to Musk.
He revealed that the company has been under duress, at one point finding itself months away from exhausting all available funds.
With this in mind, Musk explained in the email that operations at Twitter would be streamlined and cost-cutting measures, including mass layoffs, would be implemented.
A number of tech companies have announced layoffs recently, including Meta, as The Dallas Express reported.
He remained optimistic that Twitter could get back on track, writing in the email that the company may someday be worth $250 billion, per the NYT.
In the meantime, through this new stock compensation program, Twitter’s employees would have the option to have “liquid stock, but without the stock price chaos and lawsuit burdens of a public company,” Musk wrote in the email.
Twitter’s communications department has reportedly responded to all media requests for comment with a poop emoji.