Ever since Elon Musk acquired Twitter for $44 billion last year, it’s been a widely-agreed stance that he overpaid for the social media platform.
However, the amount he overpaid seems to have widened after the takeover.
According to Faithfulness(opens in new tab), Twitter is now worth about 33 percent of what the billionaire originally paid for it. That puts Twitter’s value at roughly $15 billion. The figure comes from the investment firm’s own valuation of its own stake in Musk’s Twitter, which Fidelity helped finance.
Twitter’s valuation from Fidelity has followed a pattern since Musk took over in October last year. Fidelity has steadily reduced its own holdings in the company, lowering the value of its stake 56 percent(opens in new tab) just one month after the acquisition was completed. At the end of February, Fidelity further reduced its stake to more than 63 percent(opens in new tab) before falling by a full two-thirds this month.
However, Musk’s recent claims about Twitter were soon shattered(opens in new tab) or even be profitable, the outlook of the company is not very good. Twitter lost half of its biggest advertisers when Musk took over. Many more did not return earlier this year and those who continued to advertise on the platform spent less.
Musk turned to subscription-based revenue models such as Twitter Blue and Subscriptions to offset losses, but even those proved unsuccessful.
Twitter Blue is an $8 per month subscription service that provides premium features, such as longer tweets and videos as well as a blue checkmark badge, to paying users. Based on latest data(opens in new tab) from researcher Travis Brown, less than 1 percent of Twitter’s entire monthly active user base subscribes to Twitter Blue.
Another Twitter subscription product, known as Subscriptions, allows users to pay a monthly fee directly to a particular Twitter user to access exclusive paywalled tweets and other content. Musk himself dropped that he had about 25,000 subscribers last month or only 0.018 percent of his estimated 136.4 million followers at that time.
Musk has already announced it Linda Yaccarino, a former ad executive with NBCUniversal, will come on board to replace Musk as CEO. This step is supposed to be helpful turn the tide about Twitter issues with advertisers. However, Musk made it clear that he will stay with Twitter regardless. It will be interesting to see which direction Twitter’s valuation moves in the coming months.
