Elon Musk bought Twitter with much hullabaloo in 2022, paying USD 44 billion to complete the purchase of the social media giant. The company has been struggling financially ever since he took control. And now it appears that Musk paid much more to acquire Twitter than it was worth.
In a report citing financial behemoth Fidelity, Bloomberg reported that Twitter is now worth only a third of what Musk paid. This means that the current value of Twitter is just around USD 15 billion.
Fidelity was one of the outside investors which helped Musk finance the Twitter deal.
The current worth of Twitter and Fidelity’s downgrade
Value of platform falling rapidly
This is not the first time that Fidelity downgraded its own stake in Twitter. The company has been consistent in reporting that the value of Twitter and its stake in it are falling rapidly.
In November 2022, a month after the acquisition, Fidelity downgraded its own holdings in the company by 56 per cent. In December, it further reduced its stake by another 9.6 per cent.
In February 2023, it lowered its stake once again by 7.9 per cent, thus, according to Axios, bringing its total mark down to 63.46 per cent from the total that was paid at the time of the purchase.
Ad revenue down by 50 per cent
Twitter has been struggling ever since Musk acquired it. He introduced changes that have been criticised for failing to check misinformation, hate speech and political bias. The platform has been beset with security issues and alienation of users as well as advertisers.
Bloomberg reports that Musk has saddled the company with USD 13 billion of debt and that advertising revenue has gone down by 50 per cent.
The report also says that Twitter Blue subscriptions haven’t been a success as less than one per cent of the platform’s monthly users signed up for the paid blue tick and other exclusive features.
In a decision that was seen as a move to bring back advertisers on the platform and help the struggling Twitter generate revenue, Musk announced on 12 May 2023 that he is stepping down as the chief executive officer (CEO) of the platform and appointing former NBCUniversal (NBCU) head of advertising Linda Yaccarino in his place.
He said in a tweet that Yaccarino will “focus primarily on business operations.”
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Will this affect Elon Musk’s net worth?
As per Bloomberg Billionaires Index, Twitter, Elon Musk, who also owns Tesla, SpaceX and The Boring Company beside Twitter, has a net worth of USD 190 billion as on 31 May 2023.
The index estimates that his own stake in Twitter is now worth only USD 8.8 billion and he is set to lose another USD 850 million after Fidelity’s recent downgrade.
The value of his current stake is now way lower than what he paid to acquire an estimated 79 per cent stake, which was more than USD 25 million.
(Hero and Featured images: Daddy Mohlala/@daddymohlala/Unsplash)
This story first appeared on Lifestyle Asia Kuala Lumpur