Fidelity has marked down the value of its equity stake in Twitter, leading analysts to estimate that the platform is now worth just a third of what Elon Musk paid for it. Last year, Musk bought the social media site for $44bn, of which $33.5bn was equity. Musk later admitted he had overpaid and said that Twitter was worth less than half of what he had paid. The reason for Fidelity’s markdown is unknown, and it is unclear whether the asset manager receives non-public company information. Fidelity made its first Twitter markdown in November 2021 to 44% of the purchase price, and this has been followed by further cuts in December 2021 and February 2022.
Since Musk became involved with Twitter, its financial performance has been disappointing. Musk’s takeover saddled the company with $13bn of debt and hampered its advertising revenues, which declined by 50% due to his erratic decision-making and content moderation challenges. An attempt to bolster revenue through the sale of Twitter Blue subscriptions has so far been unsuccessful. As of March, less than 1% of monthly Twitter users had subscribed to the new service. The platform has not commented on Fidelity’s announcement.
Musk’s investment in Twitter is now worth approximately $8.8bn according to Bloomberg’s Billionaires Index, which uses Fidelity’s valuation to calculate Musk’s holding. Musk spent more than $25bn to acquire his 79% stake in the company. The latest markdown has resulted in a loss of $850m from Musk’s net worth. However, despite Twitter’s challenges, Musk’s wealth overall has risen by over $48bn this year mostly due to a 63% increase in Tesla Inc’s stock price.