Fidelity, a major private shareholder in the company formerly known as Twitter, has issued a new X valuation – stating that the company is now worth only 28% of the original $44B purchase price.
It further marked down the value of its shares from 33% following X owner Elon Musk telling major brands to “go f*ck yourself” after they paused advertising on the platform …
Background
Musk started quietly buying up Twitter shares, was offered and accepted a seat on the company’s board, changed his mind a day later, offered to buy the company, Twitter resisted, then accepted before Musk tried to back out, Twitter sued, then it was all going ahead again, leaving Musk’s bankers sweating, amid claims that Twitter ordered evidence to be burned, and each side claiming that the other is under federal investigation. He eventually went ahead with the purchase at the agreed price, admitting that he did so only because a judge was about to force him to honor his offer.
He immediately set about making a series of controversial changes to the platform, firing most of the moderators and safety teams; turning the blue checkmark from a sign of account authenticity to a sign that someone was willing to pay $8; renaming the company to X; and re-admitting previously-banned accounts – including those noted for hateful conspiracy theories and racism.
The latest incidents of hate speech on the platform included an antisemitic retweet by Musk himself. Apple led more than 100 brands in pausing advertising on X. Musk responded by saying he had a message for any brand which had done so: “Go f*ck yourself.”
Fidelity reduced X valuation to 28% of purchase price
Fidelity is a mutual fund which helped Musk raise the cash needed to purchase the social media network, in return for shares in the privately-owned company. (While only public companies have their shares listed on stock exchanges, available to be bought and sold by anyone, shares in private companies can be sold by individual arrangement.)
The mutual fund has a legal obligation to continually update the value of its assets, and has reduced the assessed value of its X shares a number of times. Axios reports that the company responded to Musk’s attack on advertisers by further devaluing its holding.
Fidelity has again marked down the value of its shares in X Holdings, which the mutual fund giant helped Elon Musk buy for $44 billion when the company was known as Twitter.
Fidelity believes that X is worth 71.5% less than at the time of purchase, according to a new disclosure that runs through the end of November 2023 (Fidelity revalues private shares on a one-month lag).
This includes a 10.7% cut during November, during which time Musk told boycotting X advertisers to “go f**k yourself” during an on-stage interview with the New York Times.
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