Before Elon Musk acquired social media platform X (then Twitter), he had said that he wanted to unlock the platform’s “extraordinary potential.” Two years down the line, things haven’t really gone exactly the way X’s new owner would have hoped for. And numbers show the same – the social media platform is currently valued at $9.4 billion, which is less than a quarter of the price Musk had paid to acquire it – $44 billion.
This markdown in its valuation comes from asset management firm Fidelity, which was once instrumental in Musk’s purchase of the erstwhile Twitter. As per media reports, and disclosures from Fidelity’s Blue Chip Growth Fund, the value of Fidelity’s stake in X has clocked a decrease of an astonishing 78.7% as of the end of August.
Prior to the acquisition, Fidelity acquired a stake in the platform for $300. Now, earlier this year, in January, Fidelity had marked down its investment by 71.5% – a development that was followed up with a further 65% reduction later in the year. For now, neither Fidelity nor X have commented on the matter.
The current development marks the latest valuation cut by Fidelity ever since Musk purchased the platform in 2022, which marked the beginning of tumultuous times for the popular micro-blogging site. This includes a substantial loss of advertisers and ongoing operational difficulties. Things got even more complicated since Musk’s acquisition of Twitter was marked by a significant infusion of debt—amounting to nearly $13 billion, which was structured into term loans, bonds, and other components. This debt, for its part, put additional pressure on the platform’s financial stability. Musk, for his part, reportedly assured bankers that they would not incur losses on their investments.
Prior to this development, Fidelity’s stake in X was valued at around $5.5 million – now, that has dropped to around $4.19 million, according to media reports. Overall, $19.66 million was invested by Fidelity in X through the Blue Chip Growth Fund. Later, in March, the firm revealed that the worth of its investment in X has tanked by 73% since Musk’s takeover.
For X, the recent valuation cut is unlikely to invoke confidence in its investors, indicating a lack of faith in the platform’s ability to recover its lost value, or even find a sustainable growth path for the future. It also acts as a red flag for the advertisers on the platform, many of whom have already jumped ship by reducing or even withdrawing their ad spending (due to concerns of having their ads appear alongside sensitive content, among other reasons). For a platform like X – which has historically relied on advertising as a primary revenue stream – this is a major blow, and things do not seem to change anytime soon.
