A mutual fund that helped Elon Musk buy X now says the platform is worth 71.5% less than the $US44 billion it was purchased for in 2022, according to Axios Sunday. Fidelity cut the valuation of Musk’s social media platform by more than 10% in November when Elon Musk shared his thoughts on Jews and told advertisers to “go f**k yourselves.”
Fidelity gave Elon Musk over $US300 million to help finance his takeover of X back in April, but the mutual fund believes its investment is now worth less than half of what it paid for. Investors at Fidelity first marked down the value of its investment one month after Elon Musk’s purchase. In October, the mutual fund valued its shares in X at a 65% discount. Fidelity doesn’t explicitly say why it valued X at a steeper discount to October, but major advertisers have fled the platform in droves in the last couple of months.
Elon Musk also released Grok, his AI chatbot, as a feature on X to select users during this same period. The incorporation of xAI’s premier chatbot, and competitor to ChatGPT, was supposed to boost subscriptions on the platform, as it’s only available to X Premium Plus subscribers. Musk is hoping to reduce his reliance on advertisers by increasing subscriptions with premium features, like Grok. However, it doesn’t seem Fidelity investors were convinced that Grok tipped the scales much.
The stocks of publicly traded competitors to X such as Meta and Snap rose in November. Meta and Snap have become much more favorable options for advertisers as their social media platforms don’t run the same brand safety risks that X has.
Musk claims X was built around free speech absolutism, but that has increased scrutiny from advertisers and regulators concerned with hate speech on the platform. The European Union opened a formal investigation into X in December, examining the platform’s role in spreading antisemitic content. Major advertisers like Apple and Disney have fled the platform due to a Media Matters investigation finding antisemitic content on X.