Fidelity Sure Seems To Regret Its Decision To Contribute To Elon’s Wild Social Media Adventure
A few months ago we noted that Fidelity, which had contributed over $300 million to help Elon purchase Twitter a little over a year ago, had already marked down its investment by 65%. This news came out at basically the same time that Elon himself admitted the company's value was down 56% (from $44 billion to $19 billion).
And while Elon and Linda Yaccarino keep insisting that they're righting the ship (Yaccarino insisted the company was close to being profitable again), it does not appear that Elon's unhinged Dealbook interview has helped. Nor his embrace of anti-Semitic conspiracy theories.
Fidelity has now updated its internal valuation of its small piece of ExTwitter equity, and admits that it's marked it down 71.5% from what it paid for it initially. MarketWatch notes that Fidelity initially valued its own ExTwitter equity around $20 million, but currently views it at $5.6 million. (Other reports say Fidelity put in over $300 million, which, if true, would make it now valued at noticeably less than $100 million.) Either way, that's a huge loss in just over a year.
But, more to the point, that means that Fidelity is now valuing the entirety of ExTwitter at around $12.5 billion. For what it's worth, that appears to be less than the $13 billion in debt he saddled the company with to complete the deal. The banks who got stuck with the debt as they were unable to immediately sell it off like they usually do are (1) colluding with each other to avoid any of them selling off the debt for pennies while (2) simultaneously struggling to come up with accounting tricks to avoid taking huge losses that they know they should take. Meanwhile, it has also come out that Elon made a promise to the bankers that they wouldn't lose any money. So that'll be fun to sort out. (Of course, it's also been reported that Elon Musk promised Jack Dorsey that if he ever wanted to take the equity he rolled over into ExTwitter out, Musk would pay him at the $54.20/share price he paid for the whole company - and if I'm Jack Dorsey, right now I'd be looking to make Elon live up to that deal right about now).
I may not be the richest man in the world, but I also didn't destroy over $30 billion in value in a single company over the course of just one year through a series of incredibly, obviously, dopey moves.
Of course, it still remains somewhat incredible to me that the supposed experts at Fidelity ever thought it was worth backing Elon on this. Whatever you might say about the success of Tesla and SpaceX in increasing value for investors, from the very, very beginning of Elon's exploration into social media, it was painfully obvious he had no fucking clue what he was doing.