San Francisco: In some bad news for Elon Musk, global investment firm Fidelity has marked down its investment in Musk-run X Holdings (the parent company of X) by a whopping 71.5 per cent from the original value.
Fidelity took a stake in X Corp for $300 million in October 2022 when Musk acquired the platform, formerly called Twitter, for $44 billion.
In October last year, Fidelity had cut the valuation by 65 per cent, and now, it has further cut X’s valuation in a new disclosure, TechCrunch reported.
The Fidelity valuation cut in X comes at a time when several companies have either paused or pulled advertising on X, including Apple, Comcast/NBCUniversal, Disney, Warner Bros. Discovery, IBM, Paramount Global, Lionsgate and the European Commission, as Musk promoted anti-Semitic content on X late last year.
At The New York Times’ DealBook Summit in November, Musk singled out Disney CEO Bob, saying he should be fired immediately after the entertainment giant pulled advertisements from X.
“What this advertising boycott is going to do is kill the company. And the whole world will know that those advertisers killed the company, and we will document it in great detail,” he told the audience.
Musk has reportedly told bankers, after taking $13 billion in loan to fund his Twitter acquisition, that they will not lose any money on the deal.
Despite his assurances, reports the Financial Times, seven banks that lent money to Musk — Morgan Stanley, Bank of America, Barclays, MUFG, BNP Paribas, Mizuho and Societe Generale — “are facing serious losses on the debt if and when they eventually sell it”.
The debt is split between $6.5 billion of term loans, as well as $6 billion of senior and junior bonds and a $500 million revolver. Lenders are unlikely to get even 60 cents on the dollar for the bonds and loans.
The X platform under Musk has seen its ad share nosediving, and the company may generate $2.5 billion in 2023, missing the internal targets of $3 billion. The company earned more than $1 billion per quarter in 2022.