Twitter value reportedly drops to $15 billion, only a third of Elon Musk’s purchase price

In a surprising turn of events, Twitter, the popular social media platform, has experienced a substantial decline in its value following Elon Musk’s acquisition.

Fidelity, a prominent financial services company, has marked down its equity stake in Twitter, revealing that the company is now worth $15 billion, just one-third of what Musk paid for it. This development raises questions about Musk’s overpayment and the financial struggles faced by the platform under his leadership.

Musk, known for his ventures in the technology and automotive industries, had openly acknowledged overpaying.

“Although obviously myself and the other investors are obviously overpaying for Twitter right now, the long-term potential for Twitter in my view is an order of magnitude greater than its current value,” Musk had said during Tesla’s earnings call in October last year.

Musk’s acquisition of the social media giant amounted to an eye-popping $44 billion, with $33.5 billion in equity. However, recent statements from Musk indicate that its value is even less than half of what he initially paid.

Fidelity’s marked down valuation of Twitter’s equity

The marked down valuation of Twitter’s equity by Fidelity has intensified concerns about the platform’s financial standing. This is the third time the company has marked down the social media platform since Musk took over in Oct. 8.

In November, Fidelity initially decreased the value of its stake to 44% of the purchase price. Subsequently, there were additional markdowns, as mentioned in the report. As of late April, Fidelity’s stake in the platform, now held under Musk’s X Holdings, was valued at nearly $6.55 million, compared to $7.8 million as of Jan. 31 and almost $8.63 million at November-end.

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While Fidelity has been progressively reducing the value of its stake since November, the specific reasons behind these markdowns have not been disclosed by the company. It remains uncertain whether Fidelity receives any non-public information from Twitter that informs its revised valuation.

Twitter’s financial struggles and revenue decline

Since Musk took over Twitter, the platform has encountered significant financial hurdles. Musk’s decision-making style, coupled with challenges related to content moderation, has contributed to a decline in advertising revenue. Musk himself admitted a staggering 50% drop in advertising revenue in November, 2022.

In a tweet he said, “Twitter hasn’t changed its content moderation strategy, and added the company has done everything we could to appease the activists.

Technext reported, that twitter had fired approximately 50% of its employees since he took over on Oct. 28. This was because the company was losing over $4 million a day as tweeted by Musk

In an effort to offset this decline, Musk introduced the Twitter Blue subscription service. However, initial uptake of the service has been lackluster, with less than 1% of monthly users signing up by the end of March.

The financial struggles of the social media giant have also been exacerbated by the burden of a substantial debt. Musk saddled the company with approximately $13 billion in debt, further straining its financial health. The combination of these factors has raised concerns about the platform’s sustainability and future prospects.

According to the Bloomberg Billionaires Index, Elon Musk’s investment in Twitter is currently valued at $8.8 billion, using Fidelity’s valuation to determine the worth of his holdings. Musk had initially spent over $25 billion to acquire approximately 79 percent ownership of the company last year.

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As a result of the recent markdown, Musk’s fortune has been reduced by around $850 million from his total net worth of $187 billion, as reported by the index. Despite the challenges faced by Twitter, Musk’s overall wealth has increased by more than $48 billion this year, primarily driven by a significant 63 percent surge in the share price of Tesla Inc.