By James Warrington
An investor in X, formerly called Twitter, has written down the value of its stake by $US2.85 billion ($4.2 billion) after its owner Elon Musk told boycotting advertisers to “go f— yourself”.
Fidelity, which helped Musk buy the company for $US44 billion ($65 billion) in 2022, now believes it is worth 71.5 per cent less than at the time of purchase.
The US investment giant had already slashed the value of its investment by 65 per cent at the end of October but deepened the discount in November. It came in the same month that Musk launched a tirade against advertisers.
Speaking at a New York Times conference, Musk claimed a boycott by advertisers was going to “kill” the company, adding, “If somebody is going to try to blackmail me with advertising, blackmail me with money, go f— yourself.”
Apple, IBM and Disney are among the major brands to cut ties with the social media platform, amid concerns about lax moderation under Musk and the billionaire’s freewheeling personal style.
Fidelity’s valuation cut, which was first reported by Axios, gives the company a notional value of just $US12.5 billion and suggests X has lost $US2.85 billion of worth in the eyes of Fidelity in just four weeks.
The investment group, which contributed more than $US300 million to Musk’s takeover, does not disclose how it values privately held companies. Other shareholders may value their stakes differently.
However, X’s own internal share plan for staff valued the company at just $US19 billion in October – less than half the sum Musk paid for it.
X has undergone a turbulent period under the ownership of the Tesla billionaire. The debt-fuelled takeover has left the company struggling to break even and Musk has slashed thousands of jobs and introduced subscription fees in response.
Worsening the debt crisis is the reluctance of advertisers to work with the platform since the takeover.
X is believed to have lost 60 per cent of its advertisers after the takeover amid concerns brands were appearing alongside harmful material.
The European Commission has opened an investigation into the company over its alleged role in disseminating propaganda relating to terrorist group Hamas.
Musk has also been accused of personally promoting antisemitic and racist conspiracy theories, although he has insisted he is against antisemitism of any kind.
Linda Yaccarino, who replaced Musk as chief executive in June, has been scrambling to revive revenue and has staged a charm offensive with advertisers in a bid to win back trust.
The Telegraph, London
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Source: Thanks smh.com