The social media platform formerly known as Twitter has experienced a dramatic decline in value since Elon Musk’s acquisition, according to estimates from investment giant Fidelity, CNN reports.
While X no longer trades publicly after Musk’s $44 billion purchase in October 2022, Fidelity’s valuation of its shares serves as a widely watched indicator of the company’s financial health.
As of August, Fidelity estimates X’s shares to be worth a mere $4.2 million, representing a 24% drop from July’s valuation and a staggering 79% decrease from October 2022 when Musk acquired the platform. This translates to an estimated $9.4 billion valuation for the entire company, a far cry from the $44 billion Musk initially paid.
Analysts attribute the plummeting valuation to shrinking ad revenue, a trend exacerbated by Musk’s controversial leadership and content moderation policies. Several advertisers have expressed concerns about the prevalence of extreme content on the platform, fearing brand association with such content. A recent survey by Kantar found that 26% of marketers plan to reduce their spending on X next year, the most significant drop among major ad platforms.
Despite the negative publicity and declining value, X continues to boast a large user base, reporting 570 million monthly active users in the second quarter. However, data from Similarweb indicates a concerning decline in engagement, particularly in the US, with monthly active users on iOS and Android dropping nearly 11% year-over-year.
Gene Munster, managing partner at Deepwater Asset Management, believes Fidelity’s valuation is overly pessimistic. He argues that X’s data and potential for future growth, particularly through its new AI product Grok, could eventually justify Musk’s initial investment.
