Musk's X Acquisition: Investor Losses Mount as Valuation Plummets

Two years have passed since Elon Musk acquired Twitter for $44 billion, renaming it X. This acquisition, completed in 2022, involved numerous investors alongside Musk's substantial personal investment. Initially hailed as a strategic move, the deal's aftermath has left many stakeholders facing significant financial setbacks.

The platform's valuation has experienced a dramatic decline since Musk's takeover. Fidelity, a major financial institution, has consistently valued its X stake at approximately 72% below the purchase price for nearly a year. This valuation drop translates to substantial losses for investors who participated in the acquisition.

Among the most prominent investors, Saudi Prince Alwaleed bin Talal stands out for his continued optimism. Despite the general downturn, Alwaleed maintains that his $1.9 billion investment retains its original value. He attributes this to X's 25% ownership in xAI, Musk's artificial intelligence venture, which he believes adds significant value to the company.

However, other major investors have not shared Alwaleed's positive outlook. Jack Dorsey, Twitter's co-founder and former CEO, has publicly expressed regret over the deal. His initial $1 billion investment is now estimated to be worth only $280 million, representing a $720 million loss.

X faces numerous challenges under Musk's leadership. The platform has struggled to retain advertisers, its primary revenue source, due to controversies and changes in content moderation policies. Musk's decision to reinstate previously suspended accounts and reduce moderation efforts has further alienated some advertisers.

The deal has also attracted regulatory scrutiny. The U.S. Securities and Exchange Commission (SEC) is conducting an active fraud probe into Musk's initial accumulation of Twitter shares before the acquisition announcement.

Other significant investors and their estimated losses include:

• Larry Ellison (Oracle co-founder): $720 million loss
• Sequoia Capital: $576 million loss
• Vy Capital: $504 million loss
• Binance: $360 million loss
• Andreessen Horowitz: $288 million loss
• Qatar Investment Authority: $270 million loss

These figures are based on Fidelity's valuation estimates and represent a substantial erosion of invested capital.

"Elon's done a tremendous amount of wealth destruction since he's purchased Twitter. For the people who put capital into him for any amount, trying to explain to people how he lost so much money is not a fun conversation."

The situation at X highlights the risks associated with high-profile tech acquisitions and the challenges of transforming established social media platforms. As the company continues to evolve under Musk's leadership, investors and industry observers remain divided on its future prospects and potential for recovery.