() – The social media platform formerly known as Twitter is worth almost 80% less than it was two years ago when Elon Musk bought it, according to estimates from investment giant Fidelity.
X is no longer publicly traded after Musk shelled out $44 billion to take it private in October 2022.
However, Fidelity discloses what it believes is the value of its X shares, and those estimates serve as a closely watched thermometer for the company’s overall health.
At the end of August, those shares were worth just $4.2 million, according to a Sunday filing from Fidelity’s Blue Chip Growth Fund.
This new estimate represents a 24% drop from the value estimated by Fidelity at the end of July. And it represents a staggering 79% decline from the $19.66 million Fidelity estimated the stock was worth in October 2022, when Musk acquired Twitter.
Fidelity’s new valuation means it believes X is now worth just $9.4 billion, a far cry from the $44 billion Musk paid. Other investors might value X differently.
Analysts say the drop in Fidelity’s X price likely reflects declining advertising revenue at the company, which no longer releases quarterly financial data.
Fidelity declined to comment on specific companies.
X did not respond to request for comment.
“Musk clearly overpaid for this asset,” Dan Ives, managing director and senior equity analyst at Wedbush Securities, told in an email.
Ives said he believes Twitter was actually worth about $30 billion when Musk bought it, and it’s worth about $15 billion today. He said that while participation in X is “strong,” advertising pressure has persisted.
Under Musk’s ownership, some advertisers have expressed concerns about extreme content on the platform that they do not want their brands linked to.
A recent Kantar global survey revealed that 26% of advertisers plan to reduce their spending on X next year, the largest reduction of any major global advertising platform. Only 4% of advertisers believe that X ads offer “brand safety” (certainty that their ads will not appear near extreme content), compared to 39% for Google.
In November, Musk faced backlash from brands, some of which stopped investing in X, after the billionaire supported an anti-Semitic conspiracy theory favored by white supremacists.
Musk later apologized for what he called his “dumbest” social media post. However, during that apology, Musk also told the fleeing advertisers: “F*** you.”
But X remains a major player in social media under Musk’s ownership.
The company said it had 570 million monthly active users during the second quarter, up 6% from a year earlier.
However, research company Similarweb has detected some declines in participation.
X had 73.5 million monthly active users on iOS and Android combined in the United States in August, according to Similarweb data shared with . That represents a drop of almost 11% year-over-year and a decline of 20% since October 2022.
Similarweb also found that US web traffic to X.com in August was lower than Twitter.com before Musk bought it. However, Similarweb said that X’s traffic numbers were somewhat stronger outside the United States.
Gene Munster, managing partner at Deepwater Asset Management, said he doesn’t think X’s value has fallen as much as Fidelity’s estimates imply.
“Fidelity was too aggressive. In essence, they are cleaning the investment house,” Munster told .
Munster said that in the long run, he believes X and the data the company has access to will be worth more than the $44 billion Musk paid for Twitter.
“If you want a real-time understanding of what people are thinking, Twitter is the best source of that. And that is valuable,” Munster said.
It’s especially valuable because X’s data helped train Grok, the AI chatbot developed by xAI, Musk’s increasingly valuable AI startup.
X emerged as the unique angle for Grok, which Munster said has the potential to be Musk’s biggest source of wealth.
“When Musk bought Twitter, investors didn’t realize we would take off in AI as quickly as we are,” Munster said. “Musk’s purchase of Twitter is a clear example that he was more lucky than smart.”
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