Fidelity slashes the value of its Twitter stake by more than half • businessroundups.org

Fidelity, which was among the group of outside investors that helped Elon Musk finance his $44 billion acquisition of Twitter, has cut the value of its stake in Twitter by 56%. The recalculation comes as Twitter navigates a number of challenges, most of them due to chaotic management decisions, including an exodus of advertisers from the network.

Fidelity’s Blue Chip Growth Fund stake in Twitter was valued at approximately $8.63 million as of November, according to a monthly disclosure and Fidelity Contrafund notice. reported today by Axios. That’s less than $19.66 million at the end of October.

Macroeconomic trends are likely to be partly to blame. Stripe took a 28% internal valuation cut in July, while Instacart reportedly took a 75% valuation cut this week.

But Twitter’s post-Musk slack policies clearly haven’t helped matters.

The network has become less stable on a technical level lately, suffering outages on Wednesday after Musk made “significant” changes to the backend server architecture. Twitter recently laid off employees in its public policy and engineering department, disbanding the group responsible for reviewing content moderation and human rights-related issues, such as suicide prevention. And the company drew the ire of regulators after banning — and then swiftly reinstating — accounts of prominent journalists.

On the other hand, as Axios business editor Dan Primack rightly pointed out in a tweet, Fidelity seems to rely heavily on public market performance when it comes to valuations. It is quite possible that the company has no inside information about Twitter’s financial performance.

Cutbacks at Twitter are in full swing as the company approaches $1 billion in interest payments due on $13 billion in debt, while revenues fall. A November report from Media Matters for America estimated that half of Twitter’s top 100 advertisers, who collectively spent nearly $750 million on Twitter ads this year, appear to no longer advertise on the website. Twitter is pushing its Twitter Blue plan heavily, aiming to turn it into a bigger profit engine. But third party tracking data suggest that it starts slowly.

Some Twitter employees are bringing their own toilet paper to work after the company cuts cleaning services, the New York Times recently reportedand Twitter has stopped paying rent for several of its offices, including its San Francisco headquarters.

Musk has spent the past few weeks trying to cut about $500 million in costs not related to labor by closing a data center and launching a sale after auctioning office supplies in an effort to recoup costs, according to the aforementioned Times report. to deserve.

Separately, Musk’s team has reaches to investors for potential new investment for Twitter at the same price as the original $44 billion acquisition, according to to The Wall Street Journal.

A poll by Musk asking whether he should step down as head of the company closed on Dec. 19 with users voting en masse for his departure. Musk responded several days later, saying he would step down as CEO “as soon as [he found] someone foolish enough to take the job” and then “just run the software and server teams”.