Lanre Idris Mustapha
Elon Musk ’s social media platform X, formerly known as Twitter, has seen its value plummet by nearly 80% since his acquisition two years ago, according to recent estimates from investment firm Fidelity. Musk purchased X for $44 billion in October 2022, but Fidelity’s latest evaluation places the platform’s current worth at just $9.4 billion.
Fidelity, which holds a stake in X, disclosed that as of the end of August, its shares were valued at only $4.2 million, marking a 24% drop in value from July. This reflects a 79% decline from the $19.66 million value of its shares when Musk completed the acquisition.
Analysts point to declining ad revenue as a major factor in the platform’s valuation drop. CNN reported on Wednesday that ad sales have struggled under Musk’s leadership, contributing to financial instability. Since Musk took the company private, X has stopped publicly releasing financial reports, further clouding the company’s outlook.
Dan Ives, an analyst at Wedbush Securities, explained that while user engagement on X remains strong, advertisers are wary of associating their brands with certain types of content on the platform.
Despite these issues, Musk remains optimistic. X reported 570 million monthly active users in Q2 2024, reflecting a 6% year-over-year increase. However, data from Similarweb shows that U.S. traffic on the platform has dropped, with a 20% decline in monthly active users since Musk’s takeover.
While some investors, such as Fidelity, are lowering their expectations, others remain hopeful. Gene Munster, managing partner at Deepwater Asset Management, believes X’s long-term value could exceed the original purchase price, largely due to its potential role in Musk’s AI ventures.
Munster told CNN, “Fidelity was overly aggressive. They are essentially cleaning house on the investment,” adding that the value of X’s data assets, particularly for AI applications, could ultimately boost its valuation beyond $44 billion.
X’s data is critical to the development of Grok, the artificial intelligence chatbot created by Musk’s startup, xAI, which Munster sees as a future high-value asset for Musk.
