According to Fidelity, Twitter’s value has taken a significant hit since Elon Musk acquired the social media platform, plummeting by 66%. The investment firm recently devalued its equity stake in Twitter, revealing that the company is now worth just one-third of what Musk paid for it.
Even Musk acknowledged that he overpaid for Twitter, shelling out a whopping $44 billion for the acquisition, with $33.5 billion in equity. In a recent statement, Musk admitted that Twitter is worth less than half of what he initially paid. The details regarding how Fidelity arrived at this new, lower valuation remain unclear, as does their access to non-public information from the company.
Fidelity initially reduced the value of its Twitter stake in November, marking it down to 44% of the purchase price. This was followed by additional markdowns in December and February, indicating the ongoing struggles faced by the social media giant since Musk took over.
Twitter is now worth just one-third of what Elon Musk paid for the social-media platform. https://t.co/Grhg9ifySF
— FORTUNE (@FortuneMagazine) May 30, 2023
Musk’s decision-making and challenges with content moderation have had a detrimental impact on Twitter’s financial performance. Musk revealed that the company’s advertising revenue has declined by 50% due to a staggering $13 billion debt. Twitter’s attempt to recover this lost revenue by promoting Twitter Blue subscriptions has failed to gain traction, with less than 1% of the platform’s monthly users signing up by the end of March.
When commenting on the matter, Twitter did not provide a specific response to the request.
As a result of these setbacks, Musk’s investment in Twitter is currently valued at $8.8 billion, according to the Bloomberg Billionaires Index, which relies on Fidelity’s valuation to calculate his holding’s worth. Last year, Musk spent over $25 billion to acquire an estimated 79% stake in the company.
According to the index, the latest markdown in Twitter’s value has caused Musk’s fortune to decrease by approximately $850 million. Nevertheless, despite the challenges faced by Twitter, Musk’s wealth has surged by more than $48 billion this year, largely driven by a remarkable 63% increase in Tesla Inc.’s share price.
Twitter’s value has experienced a significant decline since Elon Musk’s acquisition, raising questions about the platform’s prospects under his leadership.