The Deteriorating Value of Musk's X/Twitter: Investor Perspectives
Written on
Chapter 1: Investor Sentiment on Musk's Leadership
Musk's stewardship of Twitter, now rebranded as X for reasons unclear, has left much to be desired. Users are exiting in large numbers, and major advertisers have fled, fearing association with extremist views. The platform has faced bans in Brazil, while the UK and EU are preparing to hold Musk accountable for the rampant hate speech and Russian disinformation proliferating on the site. Once a titan of social media, Twitter is now a shadow of its former self. Coupled with the enormous debt incurred from Musk's acquisition and the plummeting revenues stemming from his inadequate leadership, the company's value has been severely compromised. This begs the question: what do investors think of these developments, and how might they affect Musk in the future?
Fidelity, a venture capital firm that invested $316 million in Musk's takeover, has recently revealed the extent of its losses. Documents indicate that they now value their investment at a mere $88 million, a staggering 72% drop. This valuation suggests that they believe X/Twitter's worth has plummeted to just $12.32 billion, which means Musk has lost an astonishing $31.68 billion in a little over two years, according to one of his major backers.
Even more alarming is that this assessment is worse than a recent estimate by Axios, which claimed X/Twitter has only lost $24 billion in value. Given Axios's history of critical coverage of Musk, Fidelity's pessimistic valuation speaks volumes about their view of his leadership.
Section 1.1: Vocal Investors Weigh In
Another investor, Ross Gerber, has been particularly outspoken. After investing $1 million in support of Musk, he has since declared his stake worthless, stating, "Elon's done a tremendous amount of wealth destruction since he purchased Twitter." While $1 million may seem trivial compared to Musk's $44 billion acquisition, Gerber's comments highlight the desperation Musk displayed in seeking outside investment rather than relying on his own vast wealth.
Upon learning of Fidelity's assessment, Axios, and Gerber's critiques, major venture capital firms that had backed Musk were approached for their opinions on the company's current valuation. Remarkably, they all chose to remain silent. This is unusual, as VC firms typically defend their investments with positive commentary. Their reluctance to speak suggests a lack of confidence in X/Twitter's prospects or the inability to muster any positive spin on the situation.
Subsection 1.1.1: A Singular Investor's Optimism
Despite the dismal outlook from most investors, one individual appears unfazed: Prince Alwaleed of the UAE, who is the largest investor in Musk's Twitter acquisition. He recently claimed that his stake is still valued at $1.9 billion, the same amount he invested in 2022, and even described this figure as a "conservative" estimate. Alwaleed has publicly defended Musk's leadership, but his optimism raises eyebrows.
Why is Alwaleed such an outlier? His status as a prince in a conservative, non-democratic nation with significant state-owned fossil fuel interests plays a role. Musk's reduction of moderation on X/Twitter aligns with Alwaleed's political agenda, enabling the spread of climate misinformation, anti-Semitic narratives, and pro-Russian propaganda—tactics that bolster the UAE's oil sales and geopolitical influence. In this context, it's clear why Alwaleed is satisfied with his investment, even as the platform descends into chaos.
Section 1.2: Implications for Musk's Future Ventures
So, why is this situation significant? Musk has built a reputation over the past decade as a savvy entrepreneur whose high-risk projects often yield substantial returns. This reputation has allowed him to secure funding and loans for ambitious ventures, as banks and investors once viewed him as an assured success. However, the colossal failure of X/Twitter has tarnished this image profoundly.
While Tesla and SpaceX have matured into companies with substantial financial resources, they will still require investment for future growth. Tesla needs billions for the development of Model 2 and the rollout of robotaxis, while SpaceX will also seek significant funding for its Starship and Starlink expansions. Given Musk's recent track record, how can investors and banks continue to trust him? He is no longer seen as the golden child of investment. Consequently, Musk's disastrous management of X/Twitter could jeopardize the future of all his ventures.
Chapter 2: What Lies Ahead for Musk?
The first video provides an overview of the chaos surrounding Musk's leadership at Twitter, now referred to as X, highlighting the turmoil and financial implications.
The second video dives deeper into how Musk's decisions have impacted Twitter's character limit and overall functionality, revealing the extent of the damage done.
Thank you for reading. Your support is crucial for content like this. To support my work or access articles early, follow me and my project, Planet Earth & Beyond. (Originally published on PlanetEarthAndBeyond.co) Sources: WP, NYP, The Guardian, Inc