How Twitter became valued at less than one-third of Musk’s acquisition price

  • Elon Musk’s X (formerly known as Twitter) continues to depreciate as an investor now believes its value to be only one-third of what Musk paid for it.
  • This issue has sparked a reevaluation of Twitter’s future prospects and highlights the challenges and opportunities the company faces.

Recently, an investor has raised doubts about the current value of Twitter, stating that it is significantly lower than one-third of the amount Elon Musk paid to acquire the company. This questioning has sparked extensive discussions about the challenges and opportunities that lie ahead for Twitter.

How much is Twitter worth?

Elon Musk paid one-third of the cost for the social media platform, according to asset management firm Fidelity, which recently reduced the value of its stake in Twitter. The billionaire owner of Twitter acquired the struggling company for $44 billion in October, admitting that he overpaid. He recently stated that the value of Twitter is worth less than half of what he forked out. According to a report released on Sunday, as of April 28th, Fidelity Blue Chip Growth Fund valued its stake in Twitter at $6.6 million, down from $19.7 million at the end of October.

Investors are questioning the value of Twitter

On January 4, 2024, according to insiders, shortly after Elon Musk’s acquisition of Twitter, an investor questioned the valuation of Twitter, stating that its current value is less than one-third of what Musk paid for it at the time of acquisition. This news has garnered widespread attention and discussion. Nowadays, Twitter faces investor skepticism in areas such as slowing user growth, underperforming advertising revenue, regulatory and privacy issues, and a lack of innovation and differentiation. The market has also begun to reassess the value of Twitter.

Also  read: Will X ever be as profitable as YouTube for creators?

The background of Elon Musk’s acquisition of Twitter is as follows

The background of Elon Musk’s acquisition of Twitter is that he had previously proposed taking it private, but his offer was rejected by the board. Subsequently, in 2022, he purchased a 5% stake in Twitter and planned to increase his ownership. With his significant influence and wealth in the technology and entrepreneurial sectors, Musk’s investment in Twitter drew considerable attention. He expressed confidence in the future development of Twitter and pledged to work with management to achieve long-term value. Musk’s investment brought both opportunities and challenges for Twitter.

Twitter has since faced intense market competition

In comparison, competing social networks like Snap and Meta have shown significantly better performance in recent months. Snap’s value has risen by 38%, while Meta’s stock price has increased by 4.9% during this period.

It is widely known that since Musk introduced policy changes, Twitter/X has lost a considerable amount of investment and advertising funds. The platform has attempted to compensate for this shortfall through subscription services but with limited success.

In conclusion, in the current intense competition of social media, Twitter needs to maintain sharp insights and innovative spirit. It should actively seek new growth opportunities and further enhance user experience and advertising effectiveness to win market trust and investor support for its future.

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