In what can only be described as a head-on collision with reality, Fidelity Investments has just delivered a staggering verdict on Elon Musk‘s X Holdings, the entity formerly known as Twitter. The financial behemoth, which once backed Musk’s audacious $44 billion acquisition, now values X at a jaw-dropping 71.5% less than its purchase price. This isn’t just a markdown; it’s a nosedive, plunging through the end of November 2023.
While X is struggling, Elon Musk recaptured the title of world’s richest person from French luxury tycoon Bernard Arnault. In 2022, he lost $138 billion. In 2023, Tesla share prices soared 107%. As a result, Musk’s net worth rose from $138.3 billion to $232.4 billion, a figure that still does not exceed the $277.3 billion he recorded in 2021.
Musk is less fortunate with his X investment. Let’s call it what it is: X, under Musk’s capricious stewardship, seems to be racing toward an unmitigated disaster. The man’s bravado, once the stuff of legend, now rings hollow as he tells boycotting advertisers to take a hike in not-so-diplomatic terms. Meanwhile, competitors like Meta and Snap are making gains, leaving X in their digital dust. Musk’s grandiose vision for Twitter, now X, appears to be nothing more than a mirage, evaporating under the harsh light of financial reality.
Fidelity’s grim assessment is the latest in a series of blows for Musk’s pet project. Remember, this is the same venture that saw its value either stagnate or receive temporary boosts earlier in 2023, a far cry from its current freefall. Musk’s initial overvaluation of Twitter, so absurdly high that it was irresistible to the board, is now looking like a folly of epic proportions. With a consortium of banks, spearheaded by Morgan Stanley, underwriting this financial fiasco, the fallout is nothing short of spectacular.
Elon Musk, the once infallible tech maestro, seems to have exhausted his bag of tricks. Left in the wake of his ill-fated takeover are disgruntled ex-employees, wary advertisers, a laughable rebranding to X, and a mountain of debt that would make even the most seasoned Wall Street players wince.
Analysts like Vicki Bryan of Bond Angle are sounding the alarm, predicting a cash burn so intense that it could rival the sun. With annual interest payments in the ballpark of $1.3-1.5 billion and dwindling options to generate or borrow more cash, X‘s trajectory looks more like a nosedive into bankruptcy.
Musk’s timing couldn’t have been worse, embarking on this financial adventure just as central banks started tightening the screws in a battle against inflation. The result? Soaring debt servicing costs and a shrinking pool of willing lenders. The scenario is so dire it’s almost cosmic, like a black hole threatening to swallow Musk’s reality whole.
Banks are bracing for impact, anticipating a $2 billion hit as they scramble to offload Twitter‘s toxic debt. This isn’t just a financial misstep; it’s a masterclass in how not to run a media business. Musk’s vision of turning Twitter into his personal utopia – his “Earth” as he whimsically termed it – has backfired spectacularly.
It’s a lesson in hubris, a cautionary tale that even the most ardent Musk enthusiasts are struggling to digest.In the end, it’s looking increasingly likely that Wall Street investors will be left holding the bag, owners of the chaotic jumble that is now X. And perhaps, in this twisted turn of events, they’ll glean a valuable lesson on what not to do with a once-thriving social media platform.
