Elon Musk’s parent company, X (formerly Twitter), is owned by mutual fund company Fidelity, which has recently disclosed a substantial reduction in its investment in X holdings. The initial value of the shares has been slashed by an astounding 71.5%. Many are wondering what X’s future holds in light of this extreme measure. As X fights to recover its position in the advertising industry, this article will examine the difficulties it has encountered and the effects of this valuation cut.
The Context
Fidelity paid $19.2 million to acquire X in October 2022. But in October of the following year, 2023, the fund manager slashed the valuation by 65%. In November 2023, Fidelity cut X’s value even further, this time by 71.5%. The fact that Fidelity’s announcements are always one month late only serves to heighten the curiosity about what’s to come for X.
X’s Transformative Journey
Many changes have occurred at X in the last year, the most notable of which is the appointment of Linda Yaccarino, a former executive at NBCU, as CEO. Although there will be obstacles along the way, Yaccarino is confident in turning the company profitable by 2024.
The Mysterious Advertising Puzzle
X faces a formidable task in winning back the confidence and trust of advertisers. Apple, Comcast/NBCUniversal, Disney, and Warner Bros. were among the well-known advertisers that removed themselves from the platform after Elon Musk’s controversial comments. An already heated situation escalated into a full-scale boycott of X after Musk backed an antisemitic conspiracy theory.
Disclosures Made by Musk
At the DealBook Conference, Musk made some controversial comments about the advertising boycott and his frustration with it, including telling the advertisers to “go fuck themselves.” He was determined to prove that the advertisers were responsible for X’s demise and held the firm belief that the boycott would bring about that fate.
X’s Approach and Reaction
X intends to attract small and medium businesses to advertise on the platform in an effort to counter the impact of the advertiser boycott. The business recognizes it has undervalued this market segment in the past but now wants to capitalize on its potential. X disputes the $75 million loss that The New York Times estimates as a result of the boycott and instead predicts a revenue drop of $10-12 million.
Disagreement Over Musk’s Choices
Elon Musk has made some contentious decisions about banned users on the platform, living up to his reputation for taking unconventional approaches. Some of the people whose accounts he decided to restore are: right-wing academic Jordan Peterson, far-right influencer Andrew Tate, former US president Donald Trump, conspiracy theorist Alex Jones, and Kanye West. These rulings have prompted more discussion and inquiry into X’s policies regarding content moderation.
A Return to Health
A thorough plan to restore X’s credibility and win back the confidence of advertisers is essential as the company faces these difficult times. Attracting advertisers back to the platform will depend on building a strong and engaged user base and effectively moderating content.
Wrapping Up
The industry is reeling from Fidelity’s massive valuation cut of X, which has prompted questions regarding the company’s long-term viability. The unstable nature of the social media environment is demonstrated by X’s transformation journey and the difficulties it encounters in restoring advertiser trust. X must proceed cautiously through these challenges while proving its dedication to sustaining a healthy and secure online community if it wants to succeed. The ultimate test of X’s ability to weather the storm and come out on top is yet to come.
See first source: TechCrunch
FAQ
What is the recent development involving Fidelity and X (formerly Twitter)?
Fidelity, a mutual fund company, recently disclosed a substantial reduction in its investment in X holdings. The initial value of the shares has been reduced by an astonishing 71.5%.
When did Fidelity acquire X, and how much did it pay for it?
Fidelity acquired X in October 2022, paying $19.2 million for the acquisition.
What is the significance of Fidelity’s valuation cut for X?
Fidelity’s significant reduction in X’s valuation raises questions about the future of X and its position in the advertising industry.
Who is the current CEO of X, and what changes have occurred at the company recently?
Linda Yaccarino, a former executive at NBCU, is the current CEO of X. Recent changes at X include her appointment as CEO.
Why is X facing difficulties in the advertising industry, and which major advertisers have pulled out from the platform?
X has faced challenges in regaining the confidence of advertisers, partly due to controversial comments made by Elon Musk. Major advertisers like Apple, Comcast/NBCUniversal, Disney, and Warner Bros. withdrew from the platform after Musk’s remarks.
What comments did Elon Musk make regarding the advertising boycott, and how did he react to it?
Musk made controversial comments at the DealBook Conference, expressing his frustration with advertisers and even telling them to “go fuck themselves.” He believed that the advertiser boycott was responsible for X’s decline.
What is X’s approach to address the impact of the advertiser boycott, and what revenue predictions does it make?
X plans to attract small and medium businesses to advertise on the platform to counter the impact of the advertiser boycott. X disputes The New York Times’ estimate of a $75 million loss and predicts a revenue drop of $10-12 million instead.
What contentious decisions has Elon Musk made regarding banned users on X, and how have they affected the platform’s policies?
Elon Musk has made unconventional decisions to restore accounts of banned users, including individuals like Jordan Peterson, Andrew Tate, Donald Trump, Alex Jones, and Kanye West. These decisions have sparked discussions and inquiries into X’s content moderation policies.
What is X’s strategy to restore credibility and win back advertiser trust during these challenging times?
X’s strategy involves building a strong and engaged user base while effectively moderating content to regain the confidence of advertisers.
What is the overall outlook for X in the wake of Fidelity’s valuation cut and ongoing challenges in the advertising industry?
The industry is closely watching X’s ability to navigate these difficulties and come out on top. The future of X depends on its ability to sustain a healthy and secure online community while proving its dedication to advertisers and users.
Featured Image Credit: Photo by Julian Christ; Unsplash – Thank you!
