Introduction: In the ever-evolving landscape of digital platforms, the story of X (formerly Twitter) takes center stage. Fidelity, a major global investment fund and a key creditor of X, has once again revised its valuation of the social media giant. This reevaluation follows the downward trajectory initiated by Elon Musk’s acquisition in October 2022. Fidelity, having financed over $316 million of the $44 billion transaction, now estimates X’s current valuation at a mere $12.54 billion, marking a staggering 71.5% decline from the acquisition period.
Fidelity’s Continued Downward Adjustments: Exactly a year ago, Fidelity had already announced a 56% reduction in its stake in X. Prior to Musk’s acquisition, Fidelity Blue Chip Growth Fund’s stake in Twitter was valued at $19.66 million. By the end of 2022, this figure plummeted to $8.63 million.
Advertiser Exodus Amid Antisemitic Controversy: The year 2023 proved to be particularly challenging for X, with Musk revealing a precarious financial situation due to a 50% drop in ad revenues and substantial debt. In November 2023, major companies, including Apple, Comcast/NBCUniversal, Disney, Warner Bros, Discovery, IBM, Paramount Global, Lionsgate, and the European Commission, withdrew their ads from X following Musk’s apparent endorsement of an antisemitic message.
The controversy erupted when Musk supported a post accusing Jewish communities of spreading “dialectical hate against whites.” This response came after a public service announcement video from the Foundation to Combat Antisemitism, along with criticisms from anonymous users supporting antisemitic claims. Despite subsequent apologies, Musk criticized advertisers for boycotting the platform, acknowledging that it could “kill the company.”
Further adding fuel to the fire, during the DealBook conference, Musk responded emphatically to Andrew Ross Sorkin’s inquiry about the advertising pause following the antisemitic controversy: “Don’t advertise.” His clear refusal to be financially coerced by advertisers was unequivocal: “Go to hell. Is that clear?”
Linda Yaccarino’s Leadership and Profitability Pledge: In May 2023, Elon Musk announced Linda Yaccarino, former advertising director at NBCUniversal, as the new CEO of X, tasked with overseeing the platform’s commercial operations. This decision formed part of Musk’s efforts to reverse the decline in ad revenues.
By September 2023, Yaccarino assured that the company would be profitable by early 2024, expressing confidence in the improved financial situation. She also noted that 90% of the top 100 advertisers had returned to the platform. However, decisions such as the significant workforce reduction and legal challenges for non-payment of office rent severely impacted the company’s finances.
Despite Yaccarino’s claims of increased user engagement since June, interviewer Julia Boorstin questioned these statements, citing Apptopia data reporting a 30% decrease in X downloads post-rebrand. A decline in web traffic to X and a reduction in the user base since before Twitter went public were also highlighted.
Conclusion: The tumultuous journey of X under Elon Musk’s ownership raises questions about the platform’s future and the impact of controversial incidents on its financial stability. As the platform strives for profitability under the leadership of Linda Yaccarino, only time will reveal whether X can regain advertiser trust and reposition itself in the dynamic landscape of social media.
