The acquisition of Twitter (TWTR:NYE) by billionaire Elon Musk has significantly damaged the brand and value of the social media company. After Musk purchased Twitter for $44 billion in October 2022, according to an official corporate letter, the site has lost over half of its value.
According to the Wall Street Journal, Twitter is providing fresh stock grants to its employees, valuing the firm at over $20 billion. The vesting of these grants will begin after six months and continue for up to four years, and the firm is arranging a liquidity event in around one year to allow employees to sell a portion of their grants. Twitter has historically compensated its employees depending on their performance through equity grants.
Twitter has encountered a number of obstacles, including workforce reductions, cost-cutting measures, the dismissal of key executives, and high-profile executive exits, which have placed the firm in grave jeopardy. Two weeks after acquiring Twitter, Musk informed employees of a potential bankruptcy filing in November 2022. Due to Musk’s stance on content moderation, advertisers have departed from the platform, resulting in a major decline in Twitter’s profits.
Despite these challenges, Musk is enthusiastic about Twitter’s future, noting in an email that he sees the company reaching a valuation of over $250 billion. Hence, it is implied that the current value of $20 billion for stock grants would increase by a factor of ten over time. Musk also mentioned the rapid changes at Twitter, which he described as a “inverse startup” experience.
In the meantime, a CNBC report has indicated that Twitter’s computer source code has been compromised. The corporation has sent a subpoena to GitHub, the software collaboration platform where unauthorized code leaks occurred, and demanded that the post be removed immediately.
How Twitter’s Troubles Are Affecting Tesla’s Performance?
Musk’s acquisition of Twitter has also affected his other business, Tesla (TSLA:NSD), a manufacturer of electric vehicles (EVs). Musk traded Tesla shares to fund his acquisition of Twitter, and investors are concerned that he will remain distracted by Twitter’s myriad challenges. Since October 2022, TSLA stock has decreased by approximately 11.5%. Nonetheless, the stock has surged by 76% thus far in 2023, driven by rising demand for its electric vehicles as a result of price reductions and cost-cutting initiatives.
Stock Target Advisor’s consensus recommendation for Tesla is Buy. The average price projection for TSLA stock is $224.89, which indicates an upside potential of 11.8% from present levels.
