Twitter’s current valuation is now significantly lower than what Elon Musk paid for the social media platform, according to Fidelity, an investor with a stake in Musk’s company.
When Musk acquired Twitter for $44 billion last year, it was widely regarded as an overpayment.
However, the extent of the overpayment appears to be growing post-acquisition.
Fidelity’s valuation suggests that Twitter is currently worth around 33 percent of its original purchase price, putting its value at approximately $15 billion.
This valuation is based on Fidelity’s assessment of its own stake in Musk’s Twitter, as the investment firm played a role in financing the acquisition.
Fidelity’s downgrading of Twitter’s value has followed a consistent pattern since Musk took over in October of last year.
Just a month after the acquisition, Fidelity reduced the value of its stake in the company by 56 percent.
By February, the stake was downgraded by over 63 percent, and this month, it has been further reduced by two-thirds.
Despite Musk’s recent claims of Twitter soon breaking even or becoming profitable, the company’s outlook has been less than promising. Many of Twitter’s largest advertisers left the platform after Musk’s acquisition, and although some returned, their spending has decreased significantly.
Musk attempted to offset these losses by introducing subscription-based revenue models like Twitter Blue and Subscriptions. However, these efforts have proven largely unsuccessful.
Twitter Blue, a subscription service priced at $8 per month, offers premium features such as longer tweets and videos, as well as the coveted blue checkmark badge, to paying users. However, data from researcher Travis Brown indicates that less than 1 percent of Twitter’s monthly active user base has subscribed to Twitter Blue.
Twitter’s other subscription product, Subscriptions, allows users to pay a monthly fee directly to specific Twitter users for access to exclusive paywalled tweets and content. Musk revealed that he had approximately 25,000 subscribers last month, which amounted to only 0.018 percent of his roughly 136.4 million followers at the time.
In an effort to address Twitter’s advertising challenges, Musk announced the appointment of Linda Yaccarino, a former ad executive with NBCUniversal, as the new CEO.
Musk himself will remain involved with Twitter. It remains to be seen how Twitter’s valuation will evolve in the coming months under this new leadership.