Elon Musk’s X Is Now Worth $36 Billion LESS Than What He Bought It For — And Now Less Than Its Own Debt, Reuters Estimates
Hannibal Hanschke/Pool via AP
It was nearly a year ago when Elon Musk completed his acquisition of Twitter and bought the social media platform for $44 billion. Almost 365 days later, a new estimation assessed that the platform now known as X has fallen into the single-digit billions in terms of its value.
Reuters took a dive into the plans for X’s chief executive, Linda Yaccarino, to meet with the bank lenders who financially supported Musk’s Twitter takeover last October. Yaccarino’s reported goal is to explain how X will pay off its outstanding $13 billion debt, though the meeting is likely to be shaped by the platform’s continuously declining ad revenue while Musk keeps on pushing a new subscription service.
In examining these factors, Reuters determined that X’s value has declined to about $8 billion, a fraction of the $44 billion Musk paid to buy it:
Put it all together, and X isn’t just worth less than Musk paid for it, but likely less than its debt. Assume that the company’s revenue last year was $4.7 billion, based on results before it was taken private. If advertising has dropped by half, then this year’s sales should be a bit over $2.5 billion. Put that on the same enterprise-value-to-sales multiple as Snap, which is down to a mere 3 times, and X is worth around $8 billion.
The company is so far covering its hefty interest payments of $300 million per quarter, and Yaccarino sees profitable days ahead. But between Musk’s impromptu product shifts and the need to woo back advertisers, her task is daunting. If things deteriorate further, the company’s bankers – already nursing billions in on-paper losses – face the prospect of taking back the keys to a diminished platform that is worth less than even their claim on it. Like a financial black hole, X threatens to consume most of whatever value it once had.
Throughout Musk’s ownership of X, his management of the platform has been frequently criticized, and the Tesla and Space X CEO has embraced the reality that the platform is losing value. X is currently facing criticism for implementing Musk’s policy of scrubbing links and headlines from news stories, with detractors saying it makes using the platform a lot more difficult.
