Elon Musk and X investors have reportedly taken a $24 billion write-off after the social media platform's value plummeted 72% since the billionaire bought the company less than two years ago.
Musk and his partners paid $33.5 billion for the $44 billion acquisition of the site formerly known as Twitter in October 2022. The initial payment is now valued at just $9.38 billion, but The Washington Post reported..
The remaining $44 billion was paid for with loans from banks that were unable to get the debt off their balance sheets, according to a recent analysis by financial services firm Fidelity Investments cited by the magazine.
X's financial woes may be due to a flurry of advertisers leaving the site, upset by Musk's laissez-faire content moderation policies, which also drew criticism from Brazilian authorities, who banned the site for refusing to censor political speech.
“Elon has destroyed a huge amount of wealth since he bought Twitter,” Ross Gerber, who invested less than $1 million in the company, told The Washington Post, adding that he now believes his shares are worthless.
“For people who put any amount of capital into him, it's not a fun conversation to have to go through explaining how he lost a lot of money,” Garber said.
Fidelity held $19.66 million in Twitter stock before Musk bought the company.
But the company now says it is valued at $5.3 million, 72% lower than what it paid.
As Musk was assembling his investor group, Fidelity added just over $300 million to his $44 billion acquisition.
But the company has written down the value of its stake by 72%, leaving it worth $88 million as of Friday.
Among Mr. Musk's partners who have taken the hardest financial hit from their investments in social media companies is Saudi Arabia's Prince Alwaleed bin Talal Saud, who put about $2 billion of Twitter stock into the deal to take the company private.
According to recent figures released by Fidelity, the Saudi royal family lost $1.4 billion on their investments.
But Alwaleed told The Washington Post that X's stake is worth $1.9 billion, the same as when Musk first bought the company, which he considered a “conservative” estimate.
“In our opinion, and I personally think at least [at] “It's the entry level when we join,” Alwaleed told the paper.
“There's no depreciation whatsoever.”
“We are very happy to partner with Musk,” Alwaleed said, “and we categorically refuse to offer any discounts.” [the] company.”
Twitter co-founder and former CEO Jack Dorsey invested $1 billion in X, but Fidelity wrote down the value of his stake to just $280 million, a loss of $720 million.
Dorsey initially supported Musk's vision for the site, but said last year that he didn't believe Musk “took the appropriate action after he realized the timing was wrong.”
“It all went wrong,” said Dorsey, who has since backed a rival platform, Blue Sky.
Larry Ellison, the billionaire co-founder of Oracle and a friend of Musk's who owns $1 billion in stock, also suffered significant losses, according to Fidelity.
Sequoia Capital, the venture capital firm that has backed Apple, Google, Oracle and YouTube, lost $576 million on its original investment of $800 million, while V Capital lost $504 million in value on its $600 million investment, according to a Fidelity analysis.
According to the Washington Post, cryptocurrency exchange Binance lost $360 million, Andreessen Horowitz lost $288 million, and Qatar Investment Authority lost $270 million.
Dorsey, Ellison, Sequoia, Binance, Vy Capital, Andreessen Horowitz, Fidelity and the Qatar Investment Authority declined to comment.
