Mutual fund company Fidelity has marked down its investment in X holdings — the parent company of X (formerly Twitter) owned by Elon Musk — by 71.5% from the original valuation of shares, according to a new disclosure.
Key Takeaway
Fidelity has significantly reduced its investment in X holdings, signaling concerns about the company’s valuation and performance. X, under the leadership of CEO Linda Yaccarino, aims to address challenges in attracting advertisers and achieving profitability amidst ongoing controversies.
Background of the Valuation Cut
Fidelity spent $19.2 million to acquire a stake in X back in October 2022. The fund manager made a valuation cut of 65% in October 2023. And now in the November 2023 disclosure, the firm has made a further cut in X’s valuation. Notably, Fidelity’s disclosures are one month behind the current date.
Challenges and Changes at X
X has experienced significant changes, including the appointment of a new CEO, Linda Yaccarino, a former NBCU executive. Yaccarino expressed optimism about the company’s profitability in 2024 during an interview at the Code Conference in September 2023.
Advertising Challenges and Responses
The company faces challenges in convincing advertisers to invest in the platform, particularly after a series of controversial statements made by Elon Musk. Several prominent advertisers, including Apple, Comcast/NBCUniversal, Disney, and others, withdrew from the platform after Musk made contentious remarks. Musk’s decisions to reinstate accounts of previously banned users, including conspiracy theorist Alex Jones and former U.S. President Donald Trump, have also sparked debates.
