"X Company Value Plummets 72% After Musk Acquisition"

Financial Investment Company Fidelity Analysis

Global social media platform X (formerly Twitter) has seen its value drop by more than 70% since being acquired by Elon Musk, according to an analysis.

US media outlet Axios reported on the 31st of last month (local time) that global asset management firm Fidelity values X's corporate worth at $12.5 billion (approximately 16.2 trillion KRW).

Photo by Reuters-Yonhap News

Compared to Musk's acquisition of Twitter for $44 billion (about 57.2 trillion KRW) in 2021, the value has fallen by 71.5% in less than two years. Fidelity analyzed that X's corporate value dropped by 10.7% in November alone.

Fidelity cited "owner risk," specifically Musk, as the main reason for the low valuation of X. However, Axios explained that Fidelity does not have much internal information regarding X's financial performance. In reality, X's corporate value could be assessed differently.

X's Advertising Revenue Halved

Bloomberg News recently cited sources saying that X's management aimed for $3 billion in annual revenue from advertising and subscriptions last year but is expected to fall far short of this target. X is estimated to have earned $2.5 billion in advertising revenue last year. X generated about $600 million in revenue per quarter through the third quarter of last year, and a similar scale is expected for the fourth quarter.

In 2021, before Musk acquired X, annual revenue exceeded $5 billion, with advertising revenue accounting for about 90% of total revenue at that time. However, currently, the share of advertising revenue has dropped to around 70-75% of the total.

Suspicions that X has neglected content that incites hate have led to an increase in advertiser departures, resulting in a decline in advertising revenue. The progressive media watchdog group Media Matters reported last month that advertisements from companies such as IBM and Apple were placed next to Nazi-related content on the X platform. Following the report, major global companies including IBM, Apple, Disney, Comcast, and Paramount decided to suspend advertising on X.

UK's BBC reported on the advertising suspension situation, stating, "X, which Musk acquired last year for $44 billion (about 57 trillion KRW), faces a real possibility of bankruptcy due to risks that Musk himself has created."