X/Twitter’s Valuation Decline
Elon Musk paid $54.20 per share for Twitter when he completed his acquisition on Oct. 28, 2022. The total purchase price was approximately $44 billion. This transaction made X/Twitter a private company, meaning it cannot be valued on the public market by simply looking at its stock price and outstanding shares.
However, investment firms such as Fidelity are able to make informed estimates as to the value of private companies based on a number of factors, such as cash flow, growth, capital raises, comparable company valuation and so on.
As of October 2023, one year after Musk took the company private, Fidelity valued X at $19 billion, down from its acquisition value of $44 billion. By October 2024, Fidelity’s valuation had plummeted even more, all the way down to $9.4 billion. That represents a decline of almost exactly 50% to 50.5%, to be exact.
How Much Would You Have If You’d Invested $1,000 in Twitter?
If you bought Twitter before Musk took the company private, you’d actually be in good shape. As a private investor, you would have received $54.20 per share for your Twitter investment.
But assuming you were able to hold onto your shares, the $1,000 you originally invested would now be worth $495, having lost more than half their value.
The reasons for X’s tumble in valuation are multi-fold, with no single factor causing the drop. According to Kantar, at least part of the reason is likely fundamental.
The analytics company said that 26% of marketing firms planned to cut down their ad spending on X next year, more than on any other social media platform. Already, the company has lost hundreds of millions in advertising dollars in 2024 alone. X was also regarded as less trustworthy and innovative than YouTube, Instagram or TikTok.
The direction of the company has also concerned many investors, as Musk promptly laid off 50% of Twitter’s staff and re-opened the platform to controversial commentators like Alex Jones. Musk himself has made plenty of controversial comments, including some deemed antisemitic, which has further alienated some advertisers and investors.
Anecdotally, some worry that Musk’s hands are simply too full to devote as much attention to X as a CEO should. As Musk also runs Tesla, the Boring Company, and SpaceX — and is about to take the helm of the Department of Government Efficiency — some investors fear that X is getting the short end of the stick in terms of the billionaire’s attention.
For better or worse, Musk has announced that he intends to completely change the direction of X and make it much more than a simple social media platform.
To take advantage of the boom in fintech, Musk is attempting to turn X into a central hub for users’ financial needs, offering everything from Venmo-like payments to money management and general financial tools. Musk also intends to put his technological know-how into use by adding AI functionality to X.
Whether or not these efforts succeed is anyone’s guess at this point. But those investors still holding shares of X are hoping to recover from the more than 50% loss since Musk took over.
This article originally appeared on GOBankingRates.com: If You Bought $1K of Twitter Before Elon Musk Took Over, Here’s How Much You’d Have Today
