Since the entrepreneur bought the business less than two years ago, Elon Musk and his investors in X have watched the value of the social media platform fall 72%, resulting in $24 billion in paper losses, according to a study.
The original payment made by Musk and his partners toward the $44 billion acquisition of the website formerly known as Twitter in October 2022 was $33.5 billion; however, the Washington Post stated that this amount is currently only worth a pitiful $9.38 billion.
According to a recent research by financial services firm Fidelity Investment reported by the journal, banks that have been unable to remove the debt off their balance sheets provided loans to cover the remaining $44 billion.
The departure of sponsors who have grown uneasy with Musk’s lax content moderation guidelines, which have already gotten the site banned in Brazil for refusing to restrict political speech, may be the cause of X’s financial difficulties.
Ross Gerber, who claimed to have spent less than $1 million, told the Washington Post, “Elon has done a tremendous amount of wealth destruction since he’s purchased Twitter,” adding that he now views the share as worthless.
According to Gerber, “trying to explain to people how he lost” so much money “is not a fun conversation” for the people who invested any amount of money in him.
Fidelity had a $19.66 million investment in Twitter prior to Musk acquiring the business.
However, the company now claims that the $5.3 million valuation is 72% lower than what it paid.
Fidelity increased Musk’s $44 billion buyout bid by a little over $300 million during his investor gathering.
However, the company’s investment is now worth $88 million as of Friday due to a 72% reduction in the value of its stock.
Saudi Prince Alwaleed bin Talal al Saud, who wrapped his almost $2 billion interest in Twitter into the deal that took the company private, is one of Musk’s partners that suffered the most financial setbacks from their investment in the social media platform.
Based on the latest figures disclosed by Fidelity, the Saudi prince has seen a $1.4 billion loss on his investment.
However, Alwaleed told the Washington Post that he thought Musk had paid $1.9 billion for X at the time, calling that amount a “conservative” estimate.
Alwaleed told the newspaper, “In our books, on my books personally, we are valuing at minimum [at] the entry level that we entered with.”
There isn’t any devaluation at all.
Alwaleed emphasized that “we categorically reject any discount to [the] company” and that “we are very happy with the alliance” with Musk.
Former CEO and co-founder of Twitter Jack Dorsey invested $1 billion in X; however, Fidelity reduced the value of his share to $280 million, meaning he lost $720 million.
Although Dorsey initially agreed with Musk’s plan for the website, he stated last year that he didn’t believe Musk “acted right after realizing his timing was bad.”
“Everything went wrong,” Dorsey claimed. He has subsequently endorsed Bluesky, a competitor platform.
According to Fidelity, Larry Ellison, the wealthy Oracle co-founder and friend of Musk, lost a significant amount of money as well.
According to the Fidelity analysis, Sequoia Capital, the venture capital firm that has backed companies like Apple, Google, Oracle, and YouTube, lost $576 million on its original $800 million investment, and Vy Capital saw the value of its $600 million investment drop by $504 million.
According to the Washington Post, the cryptocurrency exchange Binance lost $360 million, Andreessen Horowitz lost $288 million, and Qatar Investment Authority lost $270 million.
No comments were offered by Dorsey, Ellison, Sequoia, Binance, Vy Capital, Andreessen Horowitz, Fidelity, and Qatar Investment Authority.
