Just one month after Elon Musk bought Twitter for $44 billion, investor Fidelity slashed the carrying valuation of its stake in the social media network from $19.66 million to $8.63 million, according to a recent disclosure reported by Axios.
Fidelity, which holds its Twitter shares in several of its mutual funds under the name “X Holdings I Inc,” was among a group of outside investors that helped Musk finance his takeover by purchasing equity to the tune of $316 million.
Fidelity’s Contrafund valued its Twitter shares at $53.47 million on Oct. 31, days after Musk’s Oct. 27 deal closed. It revalued the shares at around $23.46 million as of Nov. 30, representing a 56 percent decline.
As a Twitter shareholder, Fidelity doesn’t necessarily have proprietary knowledge about Twitter’s business performance, Dan Primack reported for Axios. Instead, the revaluation may be partly based on broader tech equity declines.
The tech-heavy Nasdaq Composite Index fell 33 percent in 2022, and is now at the same level as July 2020, after the stock market crash that was attributed to the onset of the covid pandemic.
The S&P 500 fell 19.4 percent in 2022, its largest calendar-year decline since a 38 percent drop in 2008 and for the bond market, 2022 was the worst year in modern history.
Shares of Elon Musk-owned electric vehicle maker Tesla lost more than 65 percent in 2022 and more than 30 percent in December.
Musk’s short tenure as boss of Twitter has been widely seen as chaotic. After the deal was done, Musk quickly took Twitter private and said his vision for the company was to protect free speech on the platform. Then he suspended the accounts of journalists who wrote stories he didn’t like about tracking his private jet, drawing criticism that he was censoring Twitter users.
Under Musk’s watch, Twitter has seen mass layoffs and upheaval of day-to-day operations. The company had about 7,500 employees when Musk bought it. By Nov. 21, staff was down around 66 percent to 2,750, according to a Bloomberg report.