Elon Musk’s foray into the realm of social media, known as X, has witnessed a staggering descent in its market valuation. The current value stands at less than one-third of the substantial sum that the billionaire had initially invested in acquiring the former Twitter Inc. This revelation, as reported by Axios, draws on insights gleaned from disclosures made by Fidelity.
Fidelity, the financial institution that facilitated Elon Musk’s $44 billion acquisition, has now implemented a further 11% reduction in the valuation of its holdings in X. This adjustment was reflected in the most recent portfolio update for its Blue Chip Growth Fund, marking a continuation of a series of markdowns.
These adjustments come as Fidelity navigates the intricate evaluation of X, the ad-funded platform that grappled with challenges related to attracting advertisers throughout 2023.
As disclosed by Fidelity towards the close of November 2023, the financial institution holds the view that X’s worth has experienced a significant erosion, plummeting to approximately 71.5% below its staggering purchase price of $44 billion. This estimate suggests a current valuation in the vicinity of $12 billion, although alternative assessments place it slightly higher, at approximately $14 billion.
This downward trajectory includes a substantial 10.7% reduction observed in November alone. It’s noteworthy that this period coincided with a flurry of controversial statements from Elon Musk, including an audacious response to advertisers boycotting X, where he exclaimed, “go f**k yourself” during an interview with The New York Times.
In comparison with other publicly traded rivals, Meta’s stock exhibited a 4.9% increase in November, while Snap shares witnessed a robust surge of 38.2%, further accentuating the challenges faced by X in the competitive social media landscape.
Following Elon Musk’s acquisition of Twitter, Fidelity initiated a process of marking down the value of its Twitter shares. While adjustments to share values had been made earlier in the year 2023, the latest signals from Fidelity point to a notable devaluation.
However, it is worth mentioning that Fidelity’s financial assessment of X does not necessarily reflect the actual financial situation at the social media company. The financial institution’s valuation, like that of other shareholders, may diverge significantly, underscoring the multifaceted nature of stock valuation processes.
But X has been facing significant challenges in terms of retaining advertisers and users, both of which have been seeing alarmingly declining numbers ever since Musk’s takeover.
