In an assessment of Elon Musk’s social media platform X formerly known as Twitter investment firm Fidelity estimates the company’s worth has plummeted by nearly 80% since Musk acquired it for $44 billion in October 2022.
Current evaluations place the platform’s value at approximately $9.4 billion.
Fidelity disclosed that, as of the end of August, its stake in X was valued at just $4.2 million, reflecting a significant 24% decline from the previous month. This figure marks a staggering 79% drop from the $19.66 million valuation Fidelity assigned to its shares at the time of Musk’s acquisition.
Analysts attribute the sharp decline in X’s valuation to ongoing challenges with advertising revenue, a persistent issue during Musk’s tenure. Since the platform was taken private, X has stopped releasing public financial reports, leading to increased uncertainty about its financial health.
Dan Ives, an analyst at Wedbush Securities, stated that while user engagement on X remains strong, advertising pressures are mounting. Many advertisers are reportedly hesitant to align their brands with content on the platform. “Musk clearly overpaid for this asset,” Ives remarked.
A recent global survey by Kantar highlighted that 26% of marketers intend to cut ad spending on X, the highest among major social media platforms. This trend follows a series of controversial public statements made by Musk, which have sparked backlash from brands and prompted some advertisers to temporarily halt their spending.
Despite these hurdles, Musk maintains an optimistic outlook for X. The platform reported 570 million monthly active users in Q2 2024, representing a 6% year-over-year increase. However, research from Similarweb indicates a decline in U.S. traffic, revealing a 20% drop in monthly active users since Musk’s takeover.
While investors like Fidelity are adjusting their expectations downward, others remain hopeful about X’s potential. Gene Munster, managing partner at Deepwater Asset Management, argues that the long-term value of X could exceed its original purchase price, particularly due to the platform’s valuable data assets. “Fidelity was overly aggressive. They are essentially cleaning house on the investment,” Munster told CNN.
He believes that X’s data could play a crucial role in enhancing Musk’s AI initiatives, including the development of Grok, an artificial intelligence chatbot from Musk’s startup, xAI. Munster posited that understanding real-time public sentiment through X could ultimately prove to be immensely valuable. “If you want a real-time understanding of what people are thinking, Twitter is the best source of that. And that is valuable,” he said.
As Musk navigates these turbulent waters, the future of X remains uncertain, but its role in the broader landscape of social media and AI continues to generate significant interest.
