Fidelity Investments, a major mutual fund company, has significantly reduced its valuation of X Holdings, the parent company of X (formerly known as Twitter), now under the ownership of Elon Musk. According to TechCrunch, the latest disclosure reveals a drastic 71.5% markdown from the original investment value, signaling potential concerns about the company’s future prospects.
In October 2022, Fidelity invested $19.2 million in X Holdings. However, by October 2023, the fund manager had already cut the valuation by 65%. The recent November 2023 disclosure, which operates on a one-month delay, indicates a further reduction in X’s valuation.
X Holdings has experienced numerous changes over the past year, including appointing a new CEO, Linda Yaccarino, a former executive at NBCUniversal. Yaccarino, in a September 2023 interview at the Code Conference, expressed optimism about the company’s profitability by 2024.
Despite these changes, X Holdings faces significant challenges, particularly in retaining and attracting advertisers. Several major advertisers withdrew from the platform following controversial statements by Elon Musk, including Apple, Comcast/NBCUniversal, Disney, Warner Bros. Discovery, IBM, Paramount Global, Lionsgate, and the European Commission. Musk’s response to the advertising boycott was blunt and dismissive, as he publicly told advertisers to “go fuck themselves” at the Dealbook Conference.
In response to these setbacks, X Holdings is reportedly shifting its focus to small and medium businesses, aiming to encourage them to invest in advertising on the platform. This strategic pivot comes amid reports from the Financial Times in December that X will experience a significant drop in ad revenue, although the company contests the New York Times’ claim of a $75 million loss, estimating it to be around $10-12 million.
Under Elon Musk’s leadership at X Holdings, he has controversially reinstated previously banned accounts, including those of Alex Jones, Kanye West, Donald Trump, Andrew Tat, and Jordan Peterson.
