Elon Musk put up $44 billion to take over Twitter for ownership in October 2022. He introduced many chaotic changes, including ill-considered layoffs, and changed the name of the platform to X. Even though X is no longer publicly trading, investment giant Fidelity looked at the company’s overall health and found it was getting worse, CNN reports.
X is worth just $9.4 billion
Fidelity priced that if X were on the stock exchange, it would be his shares they would be worth just $4.2 million at the end of August. These new estimates mean decrease value by 24% compared to Fidelity’s estimates at the end of July. This represents a staggering 79% drop from the $19.66 million Fidelity estimated for the stock in October 2022, when Musk acquired Twitter.
Fidelity’s new valuation suggests X is now worth just $9.4 billion. That’s a huge gap between the $44 billion Musk paid for Twitter. Other investors may value X differently.
Advertising pressure on X
“Musk clearly overpaid,” Dan Ives, managing director and senior equity analyst at Wedbush Securities, told CNN. Ives estimates that he thinks Twitter was really worth about $30 billion when Musk bought it and is worth closer to $15 billion today.
Under Musk, some advertisers expressed concerns about content on the platformwith which they do not want their brands to be associated.
A global survey by Kantar found that 26% of advertisers plan to reduce their spending on X next year. Just 4% of advertisers said they believed X ads provided “brand safety” (meaning they can be sure their ads won’t appear near extreme content), compared to 39% on Google.
Musk apologizes and insults
In November, Musk faced backlash from brands, some of which suspended spending on X, after the billionaire retweeted an anti-Semitic conspiracy theory favored by white supremacists.
Musk later apologized for what he called his “dumbest” social media post. But during that apology, Musk also told the fleeing advertisers, “Go f**k yourself.”
X is still on top, although engagement is falling
But X is still a major player in social media under Musk’s leadership. The company said it had 570 million monthly active users in the second quarter, up 6% from a year earlier. However, research firm Similarweb found some declines in engagement.
According to Similarweb data shared with CNN, X had 73.5 million active users per month on iOS and Android combined in the United States in August. This represents a decline of almost 11% year-on-year and a 20% decline compared to October 2022.
Analysts say Fidelity’s falling price for X likely reflects that decreasing revenues from advertising at a company that no longer publishes quarterly financial metrics.
Grok is coming
But Musk’s platform is also valuable because X’s data helped with training Grok – chatbot artificial intelligence developed by xAIMusk’s increasingly valuable artificial intelligence startup. Grok may soon be the most important source of Musk’s fortune.