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Investment giant Fidelity has marked down its shares in X (formerly Twitter) by nearly 80% since Elon Musk's $44 billion acquisition in October 2022, implying a current valuation of approximately $9.4 billion for the social media platform.
According to Fidelity's latest disclosure, its stake in X was worth $4.2 million at the end of August 2024, representing a 24% decline from July and a dramatic 79% drop from the $19.66 million valuation in October 2022. This assessment suggests a significant erosion in the platform's value under Musk's leadership.
Industry analysts offer divergent perspectives on X's current worth. Dan Ives, managing director at Wedbush Securities, stated, "Musk clearly overpaid for this asset," estimating X's value at around $15 billion. Conversely, Gene Munster of Deepwater Asset Management argues that Fidelity's valuation might be overly pessimistic, citing X's data value for AI training as a potential game-changer.
The platform faces mounting challenges in its advertising business. A recent Kantar survey revealed that 26% of marketers plan to reduce spending on X in the coming year, the highest reduction among major global ad platforms. Only 4% of advertisers consider X "brand safe," compared to 39% for Google.
User engagement metrics paint a complex picture. While X reported 570 million monthly active users in Q2 2024, a 6% year-over-year increase, Similarweb data indicates an 11% decline in U.S. mobile users compared to the previous year. The platform has performed relatively better in markets outside the United States.
A pivotal moment came in November 2023 when Musk faced backlash for endorsing controversial content, leading to an advertiser exodus. Despite an apology, Musk's confrontational stance toward advertisers, telling them to "go f**k yourself," has complicated efforts to stabilize the platform's revenue streams.
As X navigates these challenges, its future remains uncertain. The platform's role in training Grok, an AI chatbot developed by Musk's xAI startup, could potentially offset some of the current valuation concerns. However, the stark decline in Fidelity's assessment underscores the significant hurdles X faces in justifying its $44 billion acquisition price.
