Fidelity, one of a group of outside investors that helped finance Elon Musk’s $44 billion acquisition of Twitter, has reduced the value of Twitter’s shares by 56%. The recalculation comes as Twitter goes through many challenges. Most of it is the result of chaotic business decisions, including the exodus of advertisers from the network.
Fidelity’s Blue Chip Growth Fund shares on Twitter were valued at about $8.63 million as of November, according to Axios’ first monthly disclosure and Fidelity Contrafund notice today. This is down from his $19.66 million at the end of October.
Macroeconomic trends may be partly to blame. Stripe cut his internal valuation by 28% in July, while Instacart reportedly cut its valuation by 75% this week.
But since Musk took office, Twitter’s capricious policies have clearly not solved the problem.
The network has been technically less stable lately, having suffered an outage on Wednesday after Musk made a “significant” backend server architecture change. Twitter recently laid off employees in its public policy and technology departments and dissolved groups responsible for engaging in human rights-related issues such as content moderation and suicide prevention. The company has drawn the ire of regulators after banning and quickly reinstating the account of a high-profile journalist.
And, as Axios business editor Dan Primack aptly pointed out in a tweet, Fidelity appears to rely heavily on public market performance for valuations. It’s entirely possible that the company doesn’t have inside information on his Twitter financial performance.
$13 billion in debt looms over $1 billion in interest payments, while earnings are down. According to a November report by Media Matters for America, half of Twitter’s top 100 advertisers, who have spent a combined $750 million on Twitter ads this year, appear to no longer be advertising on their websites. Twitter is pushing hard with its Twitter Blue plan, aiming to make it a bigger revenue stream. But third-party tracking data suggests a slow takeoff.
The New York Times recently reported that some Twitter employees are bringing their own toilet paper to work after the company cut cleaning services, and that Twitter is renting out several offices, including its San Francisco headquarters. have stopped paying for
According to the aforementioned Times report, Musk has been trying to save about $500 million in non-labor related costs, closing data centers in the past few weeks and auctioning off office supplies to recoup costs. After exhibiting at , we started a special sale.
Separately, Musk’s team approached investors about the possibility of making a new investment in Twitter for the same price as the original $44 billion acquisition, according to The Wall Street Journal.
A poll was conducted asking whether Musk should step down as head of the company, which ended December 19, and users voted in favor of his resignation. A few days later, Musk said he was stepping down as CEO. [he found] Someone would be stupid enough to take the job,’ and then “just run a team of software and servers.”
