NEW YORK (CNN) — The social media platform formerly known as Twitter is worth almost 80% less than it was two years ago when Elon Musk bought it, investment giant Fidelity estimates.
X has not been listed publicly since Musk took it private in October 2022 with a $44 billion investment.
But Fidelity has disclosed the value of its X shares, and that estimate serves as a barometer to keep an eye on the overall health of the company.
Those shares were worth just $4.2 million at the end of August, according to a filing Sunday by Fidelity’s Blue Chip Growth Fund.
This new estimate represents a 24% decline from what Fidelity estimated at the end of July. And that’s a staggering 79% decrease from the $19.66 million Fidelity estimated the stake was worth in October 2022, when Musk acquired Twitter.
Fidelity’s new valuation suggests the company believes X is now worth just $9.4 billion, a far cry from the $44 billion Musk paid. Other investors may value X differently.
Analysts say the sharp decline in the price of Fidelity’s X likely reflects the company’s shrinking advertising revenue, and that the company no longer releases quarterly financial numbers.
Fidelity declined to comment on individual companies.
X did not respond to requests for comment.
Advertising pressure on X
“Musk is clearly overpaying for this asset,” Dan Ives, managing director and senior equity analyst at Wedbush Securities, told CNN in an email.
Ives said that when Musk bought Twitter, it was actually worth about $30 billion, but he believes it is now worth closer to $15 billion. He said engagement with X was “strong” but advertising pressure remained.
Under Musk’s ownership, some advertisers have expressed concerns about extreme content on the platform, which they don’t want linked to with their brands.
A recent global survey by Kantar found that a net 26% of marketers plan to spend less on X next year, the steepest decline of any major global advertising platform. Only 4% of advertisers say they think X ads provide โbrand safetyโ (certainty that their ads wonโt appear near extremist content), compared to 39% of Google .
In November, Mr. Musk faced a backlash from brands after the billionaire embraced an anti-Semitic conspiracy theory supported by white supremacists, with some brands reducing their spending on X. It stopped.
Musk later apologized for what he called the “stupidest” social media post ever. But in his apology, Musk also told fleeing advertisers to “fuck you.”
But X remains a major player in social media even under Musk’s ownership.
According to the company, the number of monthly active users in the second quarter was 570 million, an increase of 6% from the same period last year.
However, research firm SimilarWeb found that engagement has declined slightly.
X had 73.5 million monthly active users on iOS and Android in the U.S. in August, according to data from Similarweb shared with CNN. This is a nearly 11% decrease compared to the previous year, and a 20% decrease from October 2022.
Similarweb also found that U.S. web traffic to X.com in August was lower than to Twitter.com before the Musk acquisition. However, Similarweb says X’s traffic numbers are doing slightly better outside of 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 suggest.
“Fidelity has been too aggressive. They’re essentially doing a housecleaning of their investments,” Munster told CNN.
Munster said he believes that in the long run, X and the data it has access to will be worth more than the $44 billion Musk paid for Twitter.
“If you want to understand what people are thinking in real time, Twitter is the best source of information. And that’s valuable,” Munster said.
The X data is particularly valuable because it helps train Grok, an artificial intelligence chatbot developed by xAI, an AI startup that has become increasingly valuable to Musk.
X presents a unique angle for Grok, and Munster said it could become Musk’s biggest source of wealth.
“When Musk bought Twitter, investors didn’t expect us to move into AI so quickly,” Munster said. “Musk’s acquisition of Twitter was more luck than clever.”
CNN Wire
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