In a startling revelation, asset management firm Fidelity has exposed a drastic 71% drop in the value of X, previously known as Twitter, since Elon Musk’s takeover in October 2022. The turmoil surrounding Musk’s ownership and strained relations with advertisers has led to a significant devaluation, causing concerns among stakeholders.
Understanding the Decline:
Fidelity, a substantial equity stakeholder in X, has been consistently devaluing its stake since Musk’s acquisition, marking a sharp contrast to the $44 billion purchase price in 2022. In May 2023, Fidelity estimated X’s value at around $15 billion, a mere one-third of Musk’s initial investment.
Advertiser Tensions and Musk’s Apology:
The year 2023 witnessed tumultuous times for X, especially concerning its relationships with advertisers. Notable companies such as Walt Disney Co and IBM withdrew their advertisements from X following a controversial post by Musk. Despite Musk’s subsequent apology, he criticized the advertisers for their boycotts. In a November 2023 interview, Musk acknowledged that the ad boycott had the potential to “kill the company.”
Roots of the Downfall:
The decline of X commenced with Elon Musk’s controversial endorsement of an antisemitic post, resulting in major advertisers like Disney and Warner Bros. Discovery Inc pausing their campaigns on the platform. Musk’s acknowledgment of a 90% drop in X’s value during a rant against the Anti-Defamation League (ADL) further added to the challenges faced by the social media giant.
As stakeholders assess the implications of this significant devaluation and navigate through the complexities of advertiser tensions, the fate of X remains uncertain under Musk’s ownership.
