Musk's Email to Twitter Employees Does Not Necessarily Mean Twitter Stock, Privately Held, is Worth $20 Billion

Mark Hake

There have several reports, including at The Wall Street Journal, that an email was sent by Elon Musk to his Twitter employees offering stock-based awards. The valuation for the Twitter stock awards will be set at $20 billion.

Many said this shows that the original $44 billion that Musk paid for the company in Oct. 2022 at $54.20 per share was overvalued. However, the Musk email says he can see a " clear, but difficult, path to a >$250B valuation." No time frame was given for that target price.

The company is clearly trying to reduce costs by drastically cutting its employee rolls as well as picking up ad revenue. However, it has been besieged by bad press, FTC inquiries, and derision for the low valuation now.

Valuation May Not Last At This Level

Despite the fact that Fidelity Investments, one of Musk's investors, has cut its stake valuation by 56%, according to the WSJ article, this may not be where the stock value stays.

For one, employees are often given stock in private plans at a discount, sometimes up to 10%, to a public company's stock price. If that were the case here, it means that the value for Twitter is $22.22 billion. That is because $20 billion is 90% of $22.22 billion.

However, one source said the email quoted Musk as saying the company will lose $3 billion or more this year. However, later in the email, he said that the company could break even by the end of the second quarter. This is because he says advertisers are starting to return to the site.

That puts the stock on a slightly better valuation than SNAP, which presently is losing money, and has an $18.5 billion market capitalization. Last quarter it had a net income loss of $288.4 million, after stock-based compensation expenses (SBC) of $450 million. Those are mostly non-cash expenses.

So if Twitter is expected to show a net income breakeven, even after SBC expenses, it could be worth substantially more. That will be even more the case as revenue rises and its free cash flow (FCF) grows over the year.

In fact, the media and investors should probably expect to hear better news from Twitter, if these trends last.

That implies that the valuation for Twitter might not stay at this level for long.


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Mark R. Hake, CFA, writes articles on national and local news, stocks, and market events at,,, and as well as TalkMarkets.

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Mark Hake is a financial analyst, investor, and Chartered Financial Analyst (CFA). He writes about US and foreign stocks as well as cryptos, hedge funds, and private equity. He previously ran his own hedge fund, investment research firm, and acted as CFO for a fintech startup. He focuses on finding value, arbitrage, and hidden asset opportunities.

Phoenix, AZ

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