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Elon Musk Offers Twitter Employees Stock Grants Valued At About $20 Billion

Musk has offered new equity grants to employees that will vest after six months: 'Stock Granted Now Would Be Worth Ten Times More'

Twitter CEO Elon Musk has offered new equity grants to employees that will vest after six months.

The stock grants come at a valuation of nearly $20 billion, less than half of the $44 billion that Musk had paid to acquire the social media platform, the Wall Street Journal reported, citing an email to staff the publication had reviewed. 

Tesla CEO Elon Musk looks up as he addresses guests at the Offshore Northern Seas 2022 (ONS) meeting in Stavanger, Norway on August 29, 2022. Musk has valued the stock grants $20 billion, which he has offered to employees. CARINA JOHANSEN/BENZINGA

The company plans to offer a liquidity event in about a year, when workers can cash out some of their equity. The new grants will reportedly vest over four years. 

In the email, Musk said he was optimistic about the company’s future. “I see a clear, but difficult, path to a >$250B valuation, meaning stock granted now would be worth ten times more,” he said.

The billionaire CEO also told the staff that Twitter is being reshaped so rapidly that the company “can be thought of as an inverse startup.” He added that radical changes have been necessary to ensure that Twitter won’t go bankrupt.

Twitter has typically offered stock grants, which vests over several years, as part of employees’ compensation. Stock-based compensation has long been a popular way to attract talent at many tech companies, according to the Wall Street Journal

In 2021, Twitter reportedly spent nearly $630 million on stock-based compensation. At the time, it had more than 7,500 full-time employees.

In February, Musk emailed staff, saying the company would “make significant stock and other compensation awards, based on performance” and that the team would receive more information on March 24. 

Twitter Headquarters is seen in San Francisco, California, United States on November 18, 2022. Twitter has had transformation during the Musk era including less reliance on advertisers and moving into software as a service model to add more revenue for the company. TAYFUN COSKUN/BENZINGA

Musk previously projected that Twitter would generate less than $3 billion in revenue this year. Taking into account the company’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, according to The Information. 

The company posted a net loss of $270 million in the second quarter, which ended on June 30, 2022, compared to a profit of $66 million in the same period the prior year. 

It is projected that Twitter’s cash flow will be cash-even in 2023, after advertisers had stopped advertising on the platform. This was drawn fire from different advertisers after Musk bought the platform allowing hate speech and the re-instatement of controversial public figure, such as Donald Trump and Andrew Tate.

The Tesla CEO had bought Twitter at $44 billion after letting go over half of Twitter’s workforce and the previous CEO, Parag Agrawal. Both Agrawal and former Twitter CFO, Ned Segal, were expected to receive a $100 million severance package from Musk after being let go by him.

Former Twitter CEO Jack Dorsey had owned over 18 million shares of the company that valued over $900 million. He was one of the co-founders of the social media giant.

Produced in association with Benzinga

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