Last October, Elon Musk closed on a deal to purchase Twitter for a whopping $US44 billion. At the time, it was a price tag that many estimated to be way too much money. Musk, himself, admitted that he and his co-investors may have overpaid for the social media platform. Nevertheless, he soldiered on with the acquisition, determined to transform it into an “everything” app that, according to his generous estimation, could eventually be worth some $US250 billion.
Now, a little more than half a year later, the fruits of Musk’s labour are not only not paying off but seem to be pushing Twitter’s market value in the opposite direction. This week, financial services giant Fidelity estimated in a monthly disclosure that the microblogging site is worth about 33 per cent of what Musk initially paid for it — a projection that would put its value at something like $US15 ($21) billion. Fidelity came up with the evaluation based on a markdown of its own stake in the company.
Bloomberg, which originally reported Fidelity’s assessment, notes that its “unclear how Fidelity arrived at its new, lower valuation or whether it receives any non-public information from the company.”
So that’s…uh, not great. Under Musk’s leadership, Twitter has trotted out more than a few bizarre moneymaking efforts — including an ill-fated bid to make people pay for profile verification. Twitter also attempted to cut costs by firing large parts of its workforce, but the platform has suffered other financial slings and arrows — including a major dip in advertising revenue.
Musk, himself, seems to be aware that Twitter’s financial situation isn’t great. In late March, a memo leaked that showed the billionaire thought Twitter was then worth about $US20 billion, or less than half of what he initially paid for it.
Wild.