When it comes to Elon Musk’s Twitter, it looks like he’ll have to put out fire after fire for the foreseeable future. One of Musk’s biggest investors, Fidelity, has sold off 56% of its Twitter shares, after helping him finance the company’s massive $44 billion acquisition.
Elon Musk’s $44 billion purchase of Twitter was supported by a number of investors, some of whom have now written down their Twitter holdings by as much as 75%.
Twitter is facing a number of obstacles right now, many of which are the direct result of Musk’s haphazard management decisions, therefore the company has decided to reevaluate its strategy. The loss of advertising revenue due to advertisers leaving the site has also been factored into the new calculations.
According to a monthly disclosure and Fidelity Contrafund warning, which was first reported by Axios today, Fidelity’s Blue Chip Growth Fund’s interest in Twitter was valued at about $8.63 million as of November. The figure has dropped from October’s closing total of $19.66 million.
We can’t rule out the role that broader economic trends played. An further stakeholder in the platform, Stripe, saw a 28% drop in value internally in July, and last week it was announced that Instacart’s worth had dropped 75%.
Twitter’s unclear restrictions post-Musk clearly haven’t helped matters, either.
Technically, the network has been less stable as of late; when Musk made some significant changes to the platform’s backend server architecture last Wednesday, there was a big outage of the site. As a result, many Twitter users were unable to access their accounts and feeds.
Twitter has also recently let off staff from its public policy and engineering departments, disbanding the group responsible for offering feedback on content moderation and other problems, such as suicide prevention.
Dan Primack, business editor at Axios, observed that Fidelity appears to place a high value on public market performance. In all likelihood, the company does not have access to confidential information about Twitter’s financial standing.
Twitter is slashing a number of positions as it prepares to pay off $1 billion in interest on its $13 billion in debt and revenue continues to fall. Half of the top 100 advertisers on the site, who spent almost $750 million on commercials in the prior year, don’t appear to be doing so anymore, according to a November study by Media Matters for America.
Twitter’s goal is to grow revenue and profits, hence the company has been pushing its Twitter Blue strategy heavily. In contrast to Musk and company’s expectations, Twitter Blue hasn’t generated nearly as much money as they had hoped.
Over the past two weeks, Musk has been closing down data centres and offices and initiating a fire sale after putting office furniture up for auction in an effort to recuperate expenditures of around $500 million that are unrelated to labour. Even the rent for the majority of Twitter’s office space has been suspended by Musk.
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