Elon Musk’s big loss. X is worth almost 80% less than Twitter

Luc Williams

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.

About LUC WILLIAMS

Luc's expertise lies in assisting students from a myriad of disciplines to refine and enhance their thesis work with clarity and impact. His methodical approach and the knack for simplifying complex information make him an invaluable ally for any thesis writer.