Elon Musk’s social media platform X, formerly known as Twitter, has seen a dramatic drop in value, now estimated to be nearly 80% less than when Musk acquired it two years ago. According to recent assessments by investment firm Fidelity, X is currently valued at just $9.4 billion, down from the $44 billion price tag Musk paid in October 2022.
Fidelity, which regularly reports the value of its holdings in X, revealed that by the end of August, its stake was worth $4.2 million, a 24% decrease from the previous month. This marks a 79% plunge from the $19.66 million valuation when Musk first purchased the platform.
Analysts attribute this sharp decline to ongoing challenges with ad revenue under Musk’s leadership. Since Musk took the company private, X has stopped releasing financial reports, adding uncertainty about its financial health. Dan Ives, an analyst at Wedbush Securities, noted that while user engagement remains strong, many advertisers are wary of associating with the platform due to its content.
“Musk clearly overpaid for this asset,” Ives said.
A recent survey by Kantar showed that 26% of marketers intend to cut ad spending on X, the highest rate among major global platforms. This follows Musk’s controversial public remarks, which led to backlash from brands and some advertisers temporarily pulling their spending.
Despite these challenges, Musk remains optimistic about X’s future. The platform reported 570 million monthly active users in the second quarter of 2024, reflecting a 6% year-over-year growth. However, data from Similarweb shows that U.S. traffic on X has dropped by 20% since Musk’s takeover.
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While some investors, like Fidelity, are scaling back their expectations, others remain hopeful. Gene Munster, managing partner at Deepwater Asset Management, believes X’s long-term value could surpass the $44 billion Musk originally paid, especially given the platform’s role in Musk’s AI endeavors.
“Fidelity was overly aggressive. They are essentially cleaning house on the investment,” Munster said, adding that X’s data assets could prove invaluable to Musk’s broader ventures, including the AI chatbot Grok, developed by his startup xAI. Munster believes this could eventually become Musk’s most profitable asset.
