Elon Musk values Twitter at less than half of $44B price tag in offer to employees

[onthedarkside]

 

Billionaire Twitter CEO Elon Musk valued his company at less than half the price he purchased it for in a stock option offer to employees last week.

 

Musk gave stock grants to employees in an email earlier this month that valued the company at roughly $20 billion, a far cry from the $44 billion he purchased the company for last year, according to the Wall St. Journal.

 

"I see a clear, but difficult, path to a >$250B valuation," Musk wrote in the email announcing the grants, Twitter responded to a press inquiry from Fox Business with a poop emoji.

 

https://www.foxbusiness.com/politics/elon-musk-values-twitter-less-than-half-44b-price-tag-offer-employees

 

[Credo]

Does he just get to make up a number for the value of the company?  This sounds like a nice, big tax deduction.   

[eisfeld]

14 minutes ago, Credo said:

This sounds like a nice, big tax deduction.

Can you elaborate? I don't see how this results in a tax deduction.

[Credo]

17 minutes ago, eisfeld said:

Can you elaborate? I don't see how this results in a tax deduction.

I am not a billionaire, so I don't know, but they usually have some angle.  Maybe capital gains?  

 

I get suspicious when I see something that was purchased for $40+billion and now has been valued, by the buyer/owner, at such a low figure.  Who did this valuation?  

 

[placeholder]

3 hours ago, Credo said:

I am not a billionaire, so I don't know, but they usually have some angle.  Maybe capital gains?  

 

I get suspicious when I see something that was purchased for $40+billion and now has been valued, by the buyer/owner, at such a low figure.  Who did this valuation?  

 

First of all, everybody agrees he overpaid. He foolishly made an offer that he legally couldn't back out of although he tried mightily to do so. And since then advertising revenue has plummeted and most likely will continue to do so so long as Twitter has a toxic owner.

[thaibeachlovers]

4 hours ago, Credo said:

I am not a billionaire, so I don't know, but they usually have some angle.  Maybe capital gains?  

 

I get suspicious when I see something that was purchased for $40+billion and now has been valued, by the buyer/owner, at such a low figure.  Who did this valuation?  

 

Perhaps the lower sum is the real value and the problem was what he paid for it?

[Credo]

3 minutes ago, thaibeachlovers said:

Perhaps the lower sum is the real value and the problem was what he paid for it?

The question is, who determines the value of the company?  I don't see any independent source giving a figure.

 

[Lemsta69]

9 minutes ago, Credo said:

who determines the value of the company?

The crazy man, I mean genius came up with it himself apparently.

 

It's only a tax dodge if he sells and realises the capital loss. I doubt he'll do that as his reputation, such as it is, is one the line here. Plus he's not the sole owner, there are some other parties involved to the tune of $billions and I expect they'll want him to make good on his promise to turn Twitter around.

 

He also wants to use Twitter as his personal mouthpiece so he can spout off whatever crazy thought comes into his head ????

[eisfeld]

7 hours ago, Credo said:

I am not a billionaire, so I don't know, but they usually have some angle.  Maybe capital gains?  

 

I get suspicious when I see something that was purchased for $40+billion and now has been valued, by the buyer/owner, at such a low figure.  Who did this valuation?  

 

I asked you because it is very common for people to think "oh they lost valuation/money so that's a great tax deducation so nothing bad happened to them". But that doesn't really make sense. Most people don't really know how finances or taxes work.

 

Even IF it resulted in a tax deduction it wouldn't be great for the person/company. If you can deduct $10 from your taxable income then you don't save $10 in taxes. You "save" however much you'd have to pay in taxes on $10, let's say $3 but you got $10 less income. So you still lost $7. Usually it's more complicated and you can't deduct all your loss but that's the high level gist.

 

Now, for capital gains you have to actually realize losses. The stock price or valuation does not reflect in realized gains or losses, they are unrealized. In order to actually realize the loss Elon would have to sell his shares which I doubt he's doing right now.

[eisfeld]

4 hours ago, thaibeachlovers said:

Perhaps the lower sum is the real value and the problem was what he paid for it?

There is no "real" value. Valuation includes putting a value on future prices which is speculative in nature.

 

3 hours ago, Credo said:

The question is, who determines the value of the company?  I don't see any independent source giving a figure.

 

Anyone can put a valuation on a company. When a company is public then people usually agree that their stock price times the number of stock is the valuation. When a company is private then whoever wants to buy or sell stock in it will come up with a number. It can be based on rigorous research or it can be pulled out of the backside. And it changes all the time. Now, stock trades in private companies are not that common and mostly happen during investment rounds. Here we are talking about stock grants which are benefits to employees. The company itself via its leadership puts a valuation on the company. Usually it also involves accountants or some kind of outside input like recent reasonable offers from buyers.

 

A lower valuation means they can get a bigger chunk of the company for the same $10 than if the valuation was higher. It also means there is a bigger chance of gains because a lower valuation has a higher chance of becoming a bigger valuation later.

 

The purpose of stock grants is the give benefits to employees while trying to bind them to the company for some time. The stock is usually somehow restricted and vests over a certain period like a year or longer. The receiver of the stock usually has to pay income tax on the total amount when the stock vests and then capital gains on the price difference whenever they sell them. There are a lot more finer details and variations but that is the general idea.

Edited March 27, 2023 by eisfeld

[hotchilli]

9 hours ago, Credo said:

I am not a billionaire, so I don't know, but they usually have some angle.  Maybe capital gains?  

 

I get suspicious when I see something that was purchased for $40+billion and now has been valued, by the buyer/owner, at such a low figure.  Who did this valuation?  

 

Getting back half of what you lost ain't bad.

[placeholder]

9 minutes ago, hotchilli said:

Getting back half of what you lost ain't bad.

But getting half of what you invested is just plain awful.

[eisfeld]

12 minutes ago, hotchilli said:

Getting back half of what you lost ain't bad.

If you see it that way then I'd be happy to sell you a 1000 Baht note for 2000 Baht.

[FritsSikkink]

5 hours ago, Credo said:

The question is, who determines the value of the company?  I don't see any independent source giving a figure.

 

The stock market does this. By making these stupid statements Musk is breaking the law again about releasing financial date of a company on the stock market.

[eisfeld]

4 minutes ago, FritsSikkink said:

The stock market does this. By making these stupid statements Musk is breaking the law again about releasing financial date of a company on the stock market.

What are you talking about? Twitter is a private company now. And even if it were public what you wrote makes no sense.

[spidermike007]

For someone we all considered smart, he sure seems to have made an incredibly dumb move in over paying by as much as $25 billion, for Twitter. 

 

I hope Twitter fails. I consider it a rather toxic platform. 

[klauskunkel]

11 hours ago, onthedarkside said:

"I see a clear, but difficult, path to a >$250B valuation," Musk wrote

"but I overturned my ankle..."

[mrfill]

20 minutes ago, spidermike007 said:

For someone we all considered smart, he sure seems to have made an incredibly dumb move in over paying by as much as $25 billion, for Twitter. 

 

I hope Twitter fails. I consider it a rather toxic platform. 

Or even as much as $44bn...

And then he must be incredibly dumb if he believes the company could be worth £250bn and even dumber if he sells such a huge 'profit' on to others.

 

p..s. I never considered him smart, just reckless and lucky. He reminds me of Thomas Newton (Man who fell to Earth) and will probably end up in a similar fashion.

[FritsSikkink]

1 hour ago, eisfeld said:

What are you talking about? Twitter is a private company now. And even if it were public what you wrote makes no sense.

They are delisted in October last year, missed that. If it is listed, the C-lvl people are not allowed to make unfounded financial statements as it could influence the stock price.

Edited March 27, 2023 by FritsSikkink

[eisfeld]

1 hour ago, FritsSikkink said:

They are delisted in October last year, missed that. If it is listed, the C-lvl people are not allowed to make unfounded financial statements as it could influence the stock price.

Elon Musk bought Twitter and took it private. The whole point of the article is that he overpaid. Twitter is not listed.

 

If Twitter was still public then he wouldn't give stock grants at a $20B valuation. Doesn't make any sense whichever way you twist it.

[honcho]

15 hours ago, placeholder said:

First of all, everybody agrees he overpaid. He foolishly made an offer that he legally couldn't back out of although he tried mightily to do so. And since then advertising revenue has plummeted and most likely will continue to do so so long as Twitter has a toxic owner.

toxic owner? what planet are you from? he advocates genuine free speech not leftie propganda like twitter used to be... open your mind and see what is happening to the world ... musk is a hero for pushing back

 

[JensenZ]

8 hours ago, spidermike007 said:

For someone we all considered smart, he sure seems to have made an incredibly dumb move in over paying by as much as $25 billion, for Twitter. 

 

I hope Twitter fails. I consider it a rather toxic platform. 

When you're worth well over $200 billion (at the time he put in the offer), and you're the richest person on the planet (today he's ONLY worth $191 billion and the 2nd richest), it's quite possible that making more money is not your only goal in life. Twitter is a hobby for Musk.

 

It's incredible how many haters are coming out of the woodwork, suggesting he's dumb or doing stupid things. It reminds me of all the hate he received on this forum during the cave rescue in July 2018. I didn't hear any praise when he became the world's richest a few years later.

 

 

[JensenZ]

8 hours ago, mrfill said:

Or even as much as $44bn...

And then he must be incredibly dumb if he believes the company could be worth £250bn and even dumber if he sells such a huge 'profit' on to others.

 

p..s. I never considered him smart, just reckless and lucky. He reminds me of Thomas Newton (Man who fell to Earth) and will probably end up in a similar fashion.

I'd put money down he's a lot smarter than you are. Made $200 plus billion by being lucky? That's the most absurd comment you'll ever hear.

Edited March 27, 2023 by JensenZ

[ozimoron]

27 minutes ago, JensenZ said:

I'd put money down he's a lot smarter than you are. Made $200 plus billion by being lucky? That's the most absurd comment you'll ever hear.

He was very lucky. Daddy owned an emerald mine and was a property developer.

[Credo]

47 minutes ago, JensenZ said:

When you're worth well over $200 billion (at the time he put in the offer), and you're the richest person on the planet (today he's ONLY worth $191 billion and the 2nd richest), it's quite possible that making more money is not your only goal in life. Twitter is a hobby for Musk.

 

It's incredible how many haters are coming out of the woodwork, suggesting he's dumb or doing stupid things. It reminds me of all the hate he received on this forum during the cave rescue in July 2018. I didn't hear any praise when he became the world's richest a few years later.

 

 

It's not about hate.  I certainly don't hate Musk.  I also don't admire him.  He is well out of his own lane on Twitter.  It may be a hobby for him, but for many, it's a source of news and information.  

[eisfeld]

Musk is certainly not stupid. You can't be stupid and achieve as much as he did. It's also not all luck. But he was lucky with his start in life due to what he got from his parents. It was one of the prerequisites.

 

The purchase of Twitter at that price was dumb. He played it really badly.

 

I know a person who has what to me looks like very similar character traits as Musk shows. Having extremely high energy and a very keen sense for business. A high appetite for risk and drive to push limits. Very contact friendly and can behave compulsive at times. That person has also been extremely successful in a whole bunch of ventures but has made a few mistakes along the way.

 

There is no binary "he's super smart" or "he's stupid" choice here. People are not that simple.

[hotchilli]

12 hours ago, placeholder said:

But getting half of what you invested is just plain awful.

Not for a multi billionaire... Elon can take the loss.

[Bkk Brian]

1 hour ago, hotchilli said:

Not for a multi billionaire... Elon can take the loss.

If it was only Elon's money you may have a point but it was bought with a few billion in investors money to.

[placeholder]

6 hours ago, honcho said:

toxic owner? what planet are you from? he advocates genuine free speech not leftie propganda like twitter used to be... open your mind and see what is happening to the world ... musk is a hero for pushing back

 

 

First off, this thread is about the decline in value of Twitter. No rational person could doubt that up to now, Musk has had a strong negative effect on the value of the company.

And Musk's tweets have certainly had a negative effect on advertisers. That toxic enough for you?

And Twitter had an obligation to its shareholder to ban blatant hate speech and lies if it was to retain advertisers.  And, even so, the extent of the moderation has been greatly exaggerated. Take the most famous case; the Hunter Biden laptop Twitter delayed reports on it for a grand total of 24 hours.

Moreover, Musk does not advocate free speech. In fact he has banned speech which was critical of him. He lied about reporters' doxxing in order to ban reporters whose comments he didn't like.

Also, after he noticed a decline in the popularity of his tweets, he mobilized his engineers to game the system so that his tweets would be pushed onto people who had demonstrated no interest in following him. 

[bendejo]

Sounds like he's trying to unload it.  He WISHES he could get $20 billion for it!