In just six months since Elon Musk paid $44 billion to purchase Twitter in October last year, the company’s value has plunged by nearly two thirds.
Fidelity Investments was among the group of 19 outside investors that helped Musk finance his takeover. In its monthly disclosure of portfolio valuations, the financial services giant stated that the market value of its equity stake in Twitter—identified by its new name, X Holdings Corp.—fell to $6.5 million at the end of April, from $19.66 million when Musk concluded the deal—a 66% drop.
This is not the first time that Fidelity has marked down the company. Already in November, a month since Musk’s acquisition, Fidelity slashed the value of its Twitter stake by 56%, to $8.63 million.
Fidelity’s monthly review of portfolio valuation comes with a one-month lag. Any possible change coming from Musk announcing Linda Yaccarino as the platform’s new CEO won’t be known until the end of June.
“Although, obviously, myself and the other investors are obviously overpaying for Twitter right now, the long-term potential for Twitter in my view is an order of magnitude greater than its current value.” — Elon Musk in Tesla’s earnings call in October
In March, Musk indicated that Twitter is worth less than half of what he paid, when he reportedly offered stock grants based on $20 billion valuation to employees.
Part of the fall is the company’s value can be attributed to a series of rushed decisions such as mass layoffs affecting critical teams and challenges with content moderation that have turned advertisers away from the microblogging platform. The ad revenues have declined by half, Musk had said in March.
Musk’s attempt to find new revenue stream, such as boosting the Twitter Blue subscription has yet to prove successful. Less than 1% of Twitter’s monthly users had signed up for the Twitter Blue subscription by the end of March, before Twitter decided to remove its legacy verified badge. When that happened last month, the platform recorded a net gain of 28 subscribers, according to NBC reported Ben Collins.