Twitter Value Collapses After Fidelity Writedown

A financial institution has offered a potential glimpse into how much value Twitter has lost since it was acquired by Elon Musk.

CNN reported this week a Fidelity fund has slashed its estimate of Twitter’s value amid the ongoing chaos at the company – suggesting that Twitter has lost a staggering two thirds of its value since the Musk takeover.

Earlier this week Twitter was sued by former cleaning staff in New York City, after they alleged Elon Musk had violated the Displaced Building Service Workers Protection Act by failing to retain the janitors after terminating the contract, hiring a new contractor, and not retaining the employees under the previous contract.

Twitter value

It should be noted that Twitter under Elon Musk is facing numerous lawsuits, either from former staff, or contractors seeking payments for unpaid bills.

Musk has instituted aggressive cost-cutting at Twitter since taking over, in the face of $1.5bn of annual interest payments on the $13bn of debt he used to fund the $44bn acquisition.

Musk is also contending with declining ad revenues (advertising used to make up 90 percent of Twitter’s revenue).

But now CNN reported that a Fidelity fund has slashed its estimate of Twitter’s value, implying the social media platform may be worth only a third of its value compared to when Elon Musk acquired it in October.

According to a monthly disclosure, Fidelity’s Blue Chip Growth Fund announced that its stake in Twitter was worth $6.55 million, as of the end of April.

That is down from the $19.66 million the Fidelity fund said its stake was worth in October as Musk was finalising the acquisition.

Musk’s acquisition took Twitter into private ownership, so there are no official ways to gauge Twitter’s current value.

But the Fidelity fund revision implies Twitter may be worth only $15 billion overall, as opposed to Musk’s $44 billion purchase price.

New CEO

Fidelity did not provide a reason for the markdown in its disclosure nor an explanation of how it arrived at its valuation, but the adjustment coincides with widespread concern at Musk’s erratic decision-making whilst he was in charge of the platform.

CNN noted that Fidelity has repeatedly marked down Twitter’s value, and that its stake was worth $8.63 million in November and then $7.8 million in January.

And the current Fidelity report is over a month old, dated 28 April, so it does not reflect recent changes in Twitter’s leadership.

Last month, Elon Musk found his ‘foolish enough’ replacement as Twitter chief executive, after he lost a poll over whether he should retain the CEO role.

Musk named former NBCUniversal advertising exec Linda Yaccarino as the new Twitter CEO. That said, Musk continues to play significant roles as executive chairman and chief technology officer.