In October 2022, Elon Musk closed a deal to buy Twitter for a whopping $44 billion, including $33.5 billion in equity. At the time, many thought the price was too high compared to the social media network's true value.
Billionaire Elon Musk himself admitted that he and his co-investors may have overpaid when buying the company. However, he still expects Twitter to bring in $250 billion after becoming super app X - the app that has everything.
More than half a year later, Mr. Musk's labor has not only failed to pay off, but also appears to be pushing Twitter's market value in the opposite direction.
Financial services giant Fidelity recently estimated that the microblogging site is worth about 33% of what Mr Musk paid for it, which translates to about $15 billion.
Fidelity Blue Chip Growth Fund cut the value of its Twitter stake for the third time since Elon Musk bought the social media platform, to $6.55 million on April 28 from $7.8 million on January 31 and nearly $8.63 million at the end of November. It is unclear how Fidelity arrived at the new valuation.
Since Mr. Musk took control of Twitter after months of court battles to try to wriggle out of the original acquisition deal in April 2022, Twitter has struggled financially with $13 billion in debt and advertising revenue falling as much as 50% as advertisers worried about Mr. Musk’s erratic decisions.
Billionaire Elon Musk once said he wanted an app for everything called X. Twitter's acquisition of X Corp, a newly established company, is said to be aimed at realizing his goal. Photo: Dallas Morning News
Attempts to salvage revenue by selling Twitter Blue (the token reserved for official accounts) have so far been unsuccessful. As of the end of March, less than 1% of Twitter’s monthly users had signed up for the service.
Those challenges await Linda Yaccarino, the former head of advertising at NBCUniversal, who will become Twitter's CEO in June. Yaccarino is expected to be a key player in Twitter's future, luring advertisers back after they turned away from the platform.
Musk himself has acknowledged that Twitter’s finances are not in good shape. In late March, a leaked memo showed that the billionaire thought Twitter was worth about $20 billion, less than half of what he had paid for the company.
Mr Musk's investment in Twitter is now worth $8.8 billion. Mr Musk spent more than $25 billion to buy back about 79% of the company's shares last year.
Fidelity’s announcement shaved about $850 million off Musk’s $190 billion fortune, according to the Bloomberg Billionaires Index. Still, his fortune has increased by more than $48 billion this year, helped by a 63% gain in Tesla’s stock price. He remains second on Bloomberg’s billionaire rankings, just $2 billion behind French luxury goods magnate Bernard Arnault .
Nguyen Tuyet (According to Bloomberg, Yahoo!News, Deadline)
Source
Comment (0)