Fidelity slashes the value of its Twitter stake by over half

Fidelity has reduced the value of its stake in Twitter by 56%. Fidelity was one of the outside investors who helped Elon Musk finance his $44 billion acquisition of Twitter. The recalculation occurs as Twitter navigates a number of difficulties, most of which are due to haphazard management choices, such as an exodus of advertisers from the network.

According to a monthly disclosure and Fidelity Contrafund notice, first published today by Axios, Fidelity's Blue Chip Growth Fund stake in Twitter was valued at about $8.63 million as of November. At the end of October, it was $19.66 million, so this is a decrease.


It's likely that macroeconomic trends are partially to blame. In July, Stripe experienced a 28% internal valuation reduction, while Instacart reportedly experienced a 75% reduction this week.
But it's obvious that Twitter's ambiguous post-Musk policies haven't made things any better.

Technically speaking, the network has recently become less stable; on Wednesday, outages occurred after Musk made "significant" changes to the backend server architecture. Twitter's public policy and engineering department employees were recently let go, dissolving the team in charge of providing input on content moderation and human rights-related issues like suicide prevention. Regulators also expressed their displeasure with the company after it temporarily suspended and then quickly reinstated accounts belonging to well-known journalists.

Then again, Fidelity appears to heavily rely on public market performance when it comes to valuations, as noted appropriately in a tweet by Axios business editor Dan Primack. It's possible that the company has no inside knowledge of Twitter's financial situation.

Twitter is making numerous cuts as it nears the $1 billion mark in interest payments on its $13 billion in debt and as revenue declines. According to a Media Matters for America report from November, 50 percent of the top 100 advertisers on Twitter, who collectively spent close to $750 million on ads this year, don't seem to be doing so anymore. Twitter is actively promoting its Twitter Blue plan in an effort to increase its profitability. However, tracking information from a third party indicates that it is been slow to take off.

The New York Times recently reported that some Twitter employees are bringing their own toilet paper to work as a result of the company's reduction in janitorial services. Twitter has also stopped paying rent for several of its offices, including its San Francisco headquarters.

According to the aforementioned Times report, Musk has tried to cut around $500 million in non-labor costs over the past few weeks by closing a data center and holding a fire sale after auctioning off office supplies to recoup costs.

Separately, The Wall Street Journal reports that Musk's team has contacted potential investors for a potential new investment for Twitter at the same price as the initial $44 billion acquisition.
Users overwhelmingly chose to have Musk leave his position as the company's CEO in a poll Musk posted that ended on December 19. A few days later, Musk responded, saying he'd "just run the software and servers teams" after resigning as CEO "as soon as [he found] someone foolish enough to take the job."
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