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Elon Musk's ambitious $44 billion acquisition of X, formerly known as Twitter, has turned into a financial nightmare, with the social media platform's value plummeting by 72%.
The dramatic decline has resulted in a staggering $24 billion in paper losses for Musk and his investors, just under two years after the high-profile purchase.
Elon Musk's X Acquisition Resulted to $24 Billion Loss
In October 2022, Musk and his financial partners, including prominent figures like Saudi Prince Alwaleed bin Talal al Saud, Oracle co-founder Larry Ellison, and Twitter co-founder Jack Dorsey, initially invested $33.5 billion in the platform. This figure was part of a larger $44 billion deal, with the remaining balance covered by loans from banks, according to the Washington Post.
However, the value of their investment has now shrunk to just $9.38 billion, according to a recent analysis by Fidelity Investments, a financial services firm with substantial interest in the platform.
The decline in value has hit investors hard. For instance, Saudi Prince Alwaleed, who converted his nearly $2 billion stake in Twitter into the deal, has seen the value of his investment drop by $1.4 billion, now worth just $529.2 million.
Larry Ellison's $1 billion investment has been slashed to $280 million, representing a loss of $720 million. Jack Dorsey, who initially supported Musk's vision for the platform, has also faced a similar fate, with his $1 billion stake reduced to $280 million.
Advertisers, who play a crucial role in sustaining social media platforms, have grown increasingly uncomfortable with Musk's approach to content moderation. His hands-off policies, which have allowed the spread of hate speech and other controversial content, have not only driven advertisers away but also led to legal troubles.
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Fidelity, Major Investors Face Massive Losses
Fidelity's involvement in the X acquisition was substantial, with the firm contributing over $300 million to support Musk's takeover. However, the firm has since marked down the value of its investment by 72%, reducing its stake to just $88 million.
The impact of this devaluation is widespread, affecting a range of investors who had initially placed their faith in Musk's ability to revolutionize the social media landscape.
Venture capital firms have not been spared either. Sequoia Capital, known for backing successful companies like Apple and Google, invested $800 million in X. However, this investment has now been devalued to $224 million, resulting in a loss of $576 million.
Vy Capital's $700 million investment has been reduced to $196 million, representing a $504 million loss. Other major investors, including Binance, Andreessen Horowitz, and Qatar Investment Authority, have also suffered significant financial setbacks, losing hundreds of millions of dollars each.
Binance, which initially invested $500 million, has seen its stake decrease in value to $140 million, a loss of $360 million, according to the Daily Star. Andreessen Horowitz, a prominent venture capital firm, invested $400 million, which is now worth just $112 million, reflecting a $288 million loss. The Qatar Investment Authority, which had put $375 million into the deal, now holds a stake valued at just $105 million, marking a $270 million decrease.
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