Fidelity, an asset management firm, has reduced the value of its investment in X (formerly Twitter), now placing the platform at a valuation of just $9.4 billion.
This is a steep drop from Elon Musk’s original $44 billion purchase price in 2022, representing a huge markdown of 78.7% in Fidelity’s holdings by the end of August, according to the company’s recent disclosures.
Initially, Fidelity invested $19.66 million in the social media platform as part of Musk’s acquisition of the company. However, the asset manager now places its stake in X at a reduced figure of $4.18 million, a continuation of earlier cuts. Just a month prior, the investment was valued at $5.5 million, indicating a further decline over the last few months.
This reduction comes after a series of downward adjustments by Fidelity over the past year, with the firm first cutting its stake by 65% in 2023, and then marking it down again by 71.5% earlier this year.
Despite the ongoing reductions in value, neither Musk nor representatives from X or Fidelity have provided any public comment on the most recent valuation changes.
The $9.4 billion valuation implies that the platform is now worth less than a quarter of what Musk initially paid. Musk had secured a $13 billion loan to complete the acquisition, with lenders reportedly struggling to recover even 60% of the loan’s value.
The debt is spread across various financial instruments, including term loans and senior and junior bonds, further complicating the situation for creditors.
Meanwhile, Fidelity’s decision to scale back the valuation of its investment comes as X is currently facing some challenges under Musk’s leadership.
While Elon Musk has also been involved in raising $6 billion for his other ventures, such as xAI, the unexpected decline in X’s valuation leaves the public wondering about the long-term viability of the social media platform.
