In a recent internal memo, Twitter CEO Elon Musk announced a valuation of approximately $20 billion for the social media company. This represents a significant decrease from Musk’s previous Twitter buyout payment, which had valued the company at $44 billion.
Musk also announced stock grants to employees in the same memo, with calculations based on the $20 billion valuation. This news came as a surprise to both Twitter employees and users, particularly given Musk’s recent statements that the company was on track to achieve cash flow break-even in 2023.
Despite this valuation decrease, Twitter has been able to improve its financial position by reducing costs and implementing new revenue streams. Shortly after Musk’s appointment as CEO, the company underwent a mass layoff that reduced its workforce by over 50%, and additional job cuts have occurred into 2023. These measures helped to eliminate unnecessary expenses, such as numerous offices that had been draining the company’s resources.
Musk also introduced new ways for Twitter to generate revenue, including a paid Twitter blue tick and the return of political advertising on the platform. However, Twitter has faced criticism for its lack of human moderators to manage its content regulation process. The European Union has called for Twitter to hire more moderators, but Musk has resisted this suggestion due to the associated cost increases. Instead, he aims to automate Twitter’s content regulation process.
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