Twitter worth just one-third of what Musk paid last year
Investor says social media firm now worth $15 billion
Financial services giant Fidelity says Twitter is now valued at just one-third of the $44 billion that Elon Musk and co-investors had paid for it last year.
Fidelity recently marked down the value of its equity stake in the social media firm, resulting in a new valuation for Twitter of approximately $15 billion (£12 billion).
Fidelity, along with other investors, had participated in financing Elon Musk's acquisition of Twitter. In November, Fidelity initially decreased the value of its Twitter stake to 44% of the purchase price, and subsequently made additional markdowns in December and February.
As of late April, Fidelity's stake in Twitter was valued at approximately $6.55 million, a decline from the valuation of $7.8 million as of 31st January and nearly $8.63 million at the end of November.
Musk has publicly acknowledged that he overpaid for Twitter. Even prior to the acquisition, he expressed his belief that Twitter was overvalued and even attempted to withdraw from the deal during several months of negotiations.
"Although obviously myself and the other investors are obviously overpaying for Twitter right now, the long-term potential for Twitter in my view is an order of magnitude greater than its current value," Musk had said during Tesla's earnings call in October last year.
"I'm excited about the Twitter situation, because obviously I know their product incredibly well," he said. "And I think it's an asset that has sort of languished for a long time but has incredible potential."
In a more recent statement, Musk said that Twitter's value is now less than half of what he originally paid for the company.
The specific details regarding the methodology and information sources used by Fidelity in determining the lower valuation for Twitter are not available.
Twitter has faced significant financial challenges following Musk's takeover last year and he has made swinging job cuts.
The platform has also experienced a significant decline in advertising revenue, which is likely to be a contributing factor to its decrease in value. Although Musk stated in April that advertisers were coming back to the social media platform, data from various research firms indicate that this rebound may not be happening as swiftly as anticipated.
Reports also suggest that Musk's efforts to substitute advertiser revenue with Twitter Blue subscriptions have not been successful.
Musk recently announced that Linda Yaccarino, a former NBC executive, will take over as the new CEO of Twitter.
"Excited to announce that I've hired a new CEO for X / Twitter. She will be starting in 6 weeks." Musk tweeted in early May.
"My role will transition to being exec chair & CTO, overseeing product, software & sysops," he added.
Musk has also stated that Twitter will make an effort to rehire some of the 6,300 employees who were laid off as part of what he referred to as a 'desperate measure' in November.