Fidelity has dramatically lowered its valuation of Elon Musk’s social media platform X, formerly known as Twitter, highlighting the financial struggles the company faces. Since Musk acquired the platform for $44 billion in October 2022, X’s worth has plummeted, with Fidelity’s latest estimate placing its value at just $9.4 billion — less than a quarter of the purchase price.

Fidelity’s Blue Chip Growth Fund Shrinks Investment

In a recent filing, Fidelity’s Blue Chip Growth Fund disclosed that it had reduced the value of its investment in X by 78.7%. Initially, the asset manager invested $19.66 million in the platform following Musk’s acquisition. As of August, this stake was worth just $4.19 million, down from $5.5 million at the end of July, reflecting a consistent downward trend.

The Impact of Financial Setbacks on X’s Future

The 79% drop in value mirrors broader concerns about X’s business model and long-term profitability. Since Musk’s takeover, the platform has undergone significant changes, including the shift to a subscription model and various cost-cutting measures. However, challenges like declining advertising revenue and the departure of several high-profile advertisers have likely contributed to the sharp devaluation of the company.

Implications for Investors and the Market

This dramatic reassessment from Fidelity is indicative of the broader skepticism among investors about X’s ability to regain its value. With ongoing operational challenges and an evolving but uncertain business strategy, Musk’s ambitious plans for X remain under scrutiny.

Conclusion

As X continues its transformation under Musk’s leadership, its reduced value will pose critical questions about the platform’s future. Whether the company can recover and thrive in the competitive social media landscape remains to be seen.

Source: TechCrunch