It’s widely accepted that Elon Musk overpaid for Twitter when he purchased the social media platform for $44 billion (£36bn) last year. In March, an internal memo showed that Musk valued the company at $20bn (£16.2bn). He told the BBC that he went through with the purchase only because he believed a judge was about to force his hand.
But it looks like things are getting worse for Musk, nine months into his ownership.
As reported by Bloomberg, the financial services giant Fidelity has repeatedly marked down the value of its equity stake in Twitter, dropping it in November, December, February and April.
The most recent valuation comes in at 33 per cent of what Musk paid for it, which therefore values the company at around $15bn (£12bn).
The figure comes from Fidelity’s valuation of its own stake in Twitter, which the company helped to finance. Bloomberg says that it’s “unclear” how the figure is reached “or whether it receives any non-public information from the company”.
Still, it’s not entirely surprising that Twitter’s value is decreasing, given the volatility the company has endured over Musk’s maiden year.
Previously banned troublemakers have been welcomed back; content moderation has been severely cut back; and hate speech is on the up, leading to an 89 per cent drop in advertising revenue.
The blue tick verification system — once a neutral way of seeing whether a notable account was official — is now a paid feature open to all, leading to a wave of impersonation. This could be made a whole lot worse if Musk’s plan to redistribute official account names from dormant accounts comes to pass.
While nobody can know what Musk really thinks about Twitter, outwardly he maintains a sunny sense of optimism. When he valued the site at $20bn in the March email to staff, he said he believed the company could one day be worth $250bn (£202bn).
If Fidelity’s valuation is fair, there’s a long way to go before that dream becomes a reality.
