Fidelity Slashes Valuation of Musk’s X Holdings by 71.5% Amidst Advertiser Boycott

In a surprising twist for Elon Musk's social media venture, X Holdings, mutual fund giant Fidelity has slashed its valuation by a staggering 71.5%. In a disclosure, Fidelity revealed a significant drop in the value of X since Musk acquired it and rebranded it from Twitter.

Musk acquired Twitter for a whopping $44 billion in October 2022. In July 2023, he rebranded the social media platform as X. The latest estimate from Fidelity states that currently, X is valued at around $12.5 billion. This marks a massive decline from its previous valuation.

X Continues to Struggle Financially As It Loses Users

Notably, the downward curve for X didn't end with financial woes. Within the first year after the acquisition by Musk, X lost 15% of its monthly users. This raised questions about how the social media platform handled hate speech.

When he acquired Twitter, Musk justified the move by stating that he wanted to try to help humanity".

Musk, in response, started slashing its workforce by 50% and reduced content moderation. This drew the wrath of the EU, which issued a warning over the high ratio of posts containing disinformation on X among large social media platforms.

The revised valuation of X disclosed in November 2023 was recorded after major advertisers quit the platform.

Following the endorsement of an antisemitic conspiracy theory by Musk, it faced an advertising exodus crisis.

With a net worth of $251 billion, Musk is currently the richest man in the world, according to Forbes.

However, his decisions have been controversial, including previously banned accounts such as Alex Jones, Donald Trump, and others. Amidst these concerns, the journey for X has been turbulent in recent years.

Fidelity Acquired Stake in Twitter in October 2022

When Musk acquired Twitter in October 2022, Fidelity invested $19.2 million to acquire a stake. One year later, in October 2023, the fund manager slashed the valuation to 65%. In November 2023, the mutual fund giant further cut the valuation.

Last year, several administrative changes took place in X. It now has a new CEO, Linda Yaccarino. In September 2023, Yaccarino claimed at the Code Conference that X would turn profitable in 2024.

However, the social media platform faces an uphill battle to win back advertisers following the mass advertiser exodus which included Disney and Apple, among others.

In response to claims of a potential $75 million loss amidst the exodus, X stated that the estimated fall is likely to be $10-$12 million. Currently, the social media platform is focussing on small and medium businesses to boost its advertisement revenue.

Small and medium businesses are a very significant engine that we have definitely underplayed for a long time It [was] always part of the plan - now we will go even further with it.X

A cloud of uncertainty looms over the future of X as Musk braces up to face the storm. It remains to be seen whether Musk can sustain X's business amidst the multiplicity of ongoing challenges.

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