At the end of 2022, Elon Musk was compelled to buy Twitter for $44 billion. Despite multiple attempts to lower the price since April of that year, Musk couldn’t negotiate a reduction, as rejecting the deal would have resulted in a substantial fine. Since the acquisition, the value of the company’s assets has seen a significant decline. Fidelity, an investor in X (formerly Twitter), now values its stake at $4.19 million, a drop from $5.5 million as of the end of July. In total, Fidelity originally invested approximately $19.66 million but reduced its shares by 78.7% by August 2024. This overall decline allows for an estimated valuation of X at around $9.4 billion, a drastic decrease from the expected purchase price, which suggests the company’s worth has diminished more than 4.6 times. We’ll keep you updated on any further developments in this matter.
Investment Community’s Reaction and Regulatory Issues
As X remains a private company under Elon Musk’s ownership, accurately determining its valuation is challenging, leading to estimates based on indirect data. The deal has stirred a controversial reaction within the investment community, with some questioning the wisdom of the acquisition. This week, Elon Musk is expected to provide new testimony in the ongoing case related to this transaction. The U.S. SEC suspects Musk of failing to disclose his acquisition of more than 5% of Twitter shares promptly in the spring of 2022, which violates regulatory requirements. NIXSOLUTIONS adds that other investors have accused him of concealing information about the preparation for the deal, claiming this allowed him to profit by acquiring Twitter shares at prices below their fair value. This situation adds another layer of complexity to the already turbulent acquisition process.