Elon Musk’s Twitter takeover takes a hit as its value plunges by over 50%. He awarded equity to remaining employees, but Fidelity suggests an even steeper decline.
On Monday, October 30th, according to Fortune, Elon Musk granted equity in the company to all X employees he didn’t let go, with a claimed valuation of $19 billion or $45 per share. This marks a substantial 55% decline in value from when Musk acquired Twitter last year.
However, some assessments suggest that this valuation may be overly optimistic. Mutual fund company Fidelity, which invested over $300 million in Musk’s Twitter acquisition, has recently disclosed their belief that the company’s worth has dropped by 65% compared to the previous year.
The recent valuation is $1 billion lower than the $20 billion estimate Elon Musk mentioned in an internal email in March. Musk had initially agreed to purchase Twitter for $44 billion in April, but the deal soured due to a significant stock market downturn that particularly affected tech companies, including Twitter and Musk’s Tesla. By July 2022, Twitter’s stock price had dropped from the agreed $54.20 per share to around $34 per share.
Over the following months, Musk attempted to withdraw from the agreement, citing concerns about spam accounts. In response, Twitter filed a lawsuit, alleging that Musk’s desire to terminate the deal was influenced by the stock’s downturn. Ultimately, Twitter emerged victorious, and in October 2022, Musk acquired the company at the originally agreed-upon price.
Once at the helm of the company, Musk initiated significant changes that, at least for the time being, haven’t significantly improved the company’s valuation. Musk’s initiatives have included implementing an $8 monthly subscription fee for a blue checkmark and rebranding the iconic Twitter name and bird logo as “X.” More recently, Twitter began testing a new program ostensibly designed to combat spam bots, which requires new users to pay $1 per year to post and engage with other content.