Elon Musk’s $44 billion takeover of Twitter and conversion to X has resulted in the company losing over 70% of its valuation, according to new filings. This precipitous drop highlights ongoing concerns about Musk’s leadership and the platform’s future viability.
X Valuation Slashed in New Fidelity Filing
Major X investor Fidelity has written down the value of its stake by 71.5% since Musk gained control in October 2022. As per an SEC filing on January 2nd, 2024, Fidelity now values its X shares at just $1.31 billion, compared to the $4.56 billion pre-acquisition.
This suggests the firm believes X’s overall valuation has similarly crashed from $44 billion to $12.5 billion under Musk. The filing specifically cites his takeover, controversial moves, and loss of advertisers as reasons for the declining outlook.
Advertiser Exodus and User Engagement Concerns
X has suffered an exodus of major advertisers in recent months, including GM, United Airlines, Pfizer, and others. This loss of ad revenue ties directly into its tanking valuation.
There are also worries that divisive discourse Musk has enabled, scaled back content moderation, and introduction of paid verification has reduced user engagement. X has not disclosed daily user metrics since the takeover, leading analysts to assume stagnating or declining traffic.
This combined reputational damage and unclear path to profitability under Musk has investors seriously re-evaluating the platform’s future prospects.
Musk’s Personal Wealth Takes Major Hit
The X crash also deals a blow to Musk’s personal fortune, previously estimated at over $200 billion. His net worth tracked Tesla share price rather closely, but the carmaker was also battered in 2022 amidst the Twitter saga.
Musk sold nearly $23 billion worth of Tesla shares since his initial X bid, in part to finance the deal. The value of his remaining stake has still dropped massively as shares slid 65% last year. There is speculation he may need or want to sell more Tesla equity to prop up X operations.
Between hits to his Tesla and X holdings, Musk is no longer the world’s richest person – replaced by Bernard Arnault and family of luxury conglomerate LVMH.
What’s Next for Musk and X?
It remains unclear if Musk has a coherent strategy to stabilize X engagement, revenue, and share price after months of haphazard changes. Some analysts posit X may never recoup anywhere close to Musk’s buyout valuation.
Morgan Stanley recently set a worst-case target of just $7 per share, or under 95% downside from the current level. Others warn X could face bankruptcy if new monetization plans like subscriptions splutter and free speech policies continue alienating advertisers.
On the flipside, Musk still insists the platform has long-term potential that isn’t reflected by near-term share movements. He aims to turn X into the world’s most accurate source of information and the “digital town square.”
There remains a bull case Musk pulls levers to revive user growth and Twitter’s neglected subscription businesses. But investor confidence in his oversight continues deteriorating. Without tangible engagement and financial turnaround, further X value erosion seems imminent.
Table summarizing key valuation and ownership changes:
| Metric | Pre-Acquisition | Current | % Change |
|---|---|---|---|
| X Valuation | $44 billion | $12.5 billion* | -71.5% |
| Fidelity X Stake Value | $4.56 billion | $1.31 billion | -71.5% |
| Elon Musk Net Worth | Over $200 billion | Under $150 billion** | -25%+ |
*Fidelity estimated current overall X valuation
**Rough estimate based on 65% Tesla share decline
This outlines the severity of valuation declines across both X as a company and Elon Musk’s personal wealth after acquiring the platform. It reflects rising uncertainty whether Musk can deliver a viable turnaround strategy.
The coming months will prove pivotal in determining if X can rehabilitate its reputation, revenue streams, and share price under his guidance or continues on a downward trajectory. Most analysts assess the odds remain stacked against Musk successfully stabilizing X in its current form. But his plans remain opaque and future surprises can’t be discounted either.
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