Comment on One year after being bought for $44 billion, X is worth $19 billion
stagen@feddit.dk 1 year ago
I was expecting much less than that. o_O
Comment on One year after being bought for $44 billion, X is worth $19 billion
stagen@feddit.dk 1 year ago
I was expecting much less than that. o_O
Buffalox@lemmy.world 1 year ago
That’s because it isn’t worth nearly that.
It was estimated at around $20 bil when he bought it. Since then he has more than cut revenue in half. The value today is at most $ 10 bil.
Except Musk has added a burden of $ 20 bil in debt, causing interest cost of $1.5 bil per year.
Twitter was not earning money when Musk bought it, but now it operates at huge deficits, and has huge negative internal value.
So the company has a net negative value. The only value may come from losses being tax deductible to a buyer. But that too is worth way less than the debt. Any value is completely speculative, based on a belief against evidence, that the company can still be turned around.
chiliedogg@lemmy.world 1 year ago
And tax deductions on a loss are still a loss. Tax write-offs are a partial mitigation. They’re taken off income, not directly from taxes.
If your tax rate is 25% and you write off a $100 loss, you still lose a net $75. Yeah, if you make negative money you may avoid some taxes entirely, but not all. There’s still payroll tax, property tax, sales tax, and more that are isolated from corporate income tax.
A write-off will never make a company that’s losing money before taxes profitable. They just soften the blow.
Saledovil@sh.itjust.works 1 year ago
My understanding is that tax write-offs are deducted from the revenue, as in profit is revenue - expenses - write-offs, with different things being written of over different periods of time. So, let’s say vehicles are written off over 8 years, and I buy a truck for 40,000$, I can deduct 5,000$ each year from my revenue, meaning my taxable profits are 5,000$ less each year.
chiliedogg@lemmy.world 1 year ago
Whether a multi-year or single-year write-off, it’s still coming off taxable income, not taxes owed.
That truck doesn’t become free. If your tax rate is 25% and you manage to write it off at 100%, you saved 10 grand in taxes. Which is nice if you need the truck, but if you don’t actually need it you’ve actually wasted $30,000.
cricket97@lemmy.world 1 year ago
The value of twitter isn’t its revenue but rather its userbase. Which is still extremely strong.
Buffalox@lemmy.world 1 year ago
Doesn’t change the fact that the value when Musk bought it was estimated around $20 bil.
With an added debt since that of a similar amount of around $20 billion. It still ends up zero, even with the 20 bil worth of it’s customers.
With the reduced revenue, the value of those customers are also reduced.
So no matter how strong it was, it doesn’t change the fact that it hasn’t gotten stronger, and their value is no longer enough to balance the debt and deficits.
cricket97@lemmy.world 1 year ago
So you genuinely think twitter is worth 0$? If so, you are dumb. corporate debt means nothing when the main value you have is intangible, nonliquidatable assets. Twitter is still worth a lot of money, even with it’s debt and revenue decline.