Fidelity Cuts Value of ‘X’ Stake Once Again

SpaceX isn’t the only Elon Musk company producing spectacular fiery explosions. 

Investment firm Fidelity has once again cut the value of its Blue Chip Growth Fund’s position in X, née Twitter, according to a report posted Saturday listing the fund’s holdings. The firm now implies a 73% loss in valuation for the platform since Musk’s $44 billion acquisition in October 2022. 

X Marks the Flop

Earlier this month, sources told Bloomberg that a bank group led by Morgan Stanley held talks with the world’s sometimes richest man about refinancing the roughly $12.5 billion debt package employed in his take-private. Fidelity, which also aided Musk in his takeover while gaining a stake in the company in the process, has had a front-row seat to the site’s tanking value as well.

Saturday’s report, which tracked the Blue Chip Growth Fund’s performance in February, marked the value of the firm’s X stake at 5.7% lower than a month prior. The overall stake is now worth around $5.3 million. The devaluation is likely a reflection of X’s still-struggling ad business:

• X generated around $2.5 billion in ad sales last year, sources told Bloomberg in December, falling short of a $3 billion internal goal. In 2021, Twitter reported $5 billion in ad revenue.
• That makes X one of the few stragglers in an otherwise strong social media ad sales market. Last week, industry group Magna projected social media ad revenue to grow 14% in the US this year, past the $80 billion mark.

U-Turn: Musk’s problems aren’t isolated to his social media company. Tesla, which reports first-quarter earnings in a couple weeks, is hitting roadblocks, too. Its share price has plummeted 29% through the first three months of the year, making it the worst performer in the S&P 500, and bearish analysts are expecting delivery figures in the quarter to fall short of what they were a year ago. Dress appropriately. We’re anticipating a Muskian tweetstorm.