In a setback for Elon Musk, global investment firm Fidelity has significantly devalued its investment in X Holdings, the parent company of X, by a staggering 71.5% from its initial value. Fidelity had initially acquired a stake in X Corp for $300 million in October 2022 when Elon Musk took over the platform, previously known as Twitter, for a sum of $44 billion.
This marks the second devaluation by Fidelity within a year. In October of the previous year, the firm had already reduced X's valuation by 65%. The recent downward adjustment comes at a time when numerous companies, including major players like Apple, Comcast/NBCUniversal, Disney, and others, have either halted or withdrawn their advertising on X. This action was taken in response to Musk's promotion of anti-Semitic content on the platform late last year.
During The New York Times' DealBook Summit in November, Musk openly criticized Disney CEO Bob, asserting that he should be terminated immediately after Disney pulled its advertisements from X. Musk expressed concerns that the ongoing advertising boycott could lead to the demise of the company, vowing to document the advertisers' role in detail.
Despite Musk's reassurances to bankers, who extended a $13 billion loan for his Twitter acquisition, reports from the Financial Times suggest that seven banks, including Morgan Stanley, Bank of America, Barclays, MUFG, BNP Paribas, Mizuho, and Societe Generale, are facing substantial losses on the debt. It is anticipated that lenders may not recover even 60 cents on the dollar for the bonds and loans.
Under Musk's leadership, the X platform has experienced a significant decline in its ad share, with projections indicating potential revenue of $2.5 billion in 2023, falling short of the internal targets set at $3 billion. This is a notable decline considering the company earned over $1 billion per quarter in 2022. The challenging financial situation, coupled with the ongoing ad boycott, poses considerable challenges for X under Musk's stewardship.
(With Agency Inputs)
Read also| Core Sector Industries Report Strong 7.8% Growth in November
