Fidelity Increases X Valuation Despite Steep Discount from Musk’s Purchase Price
Investment giant Fidelity has reportedly marked up the value of its stake in Elon Musk’s X (formerly Twitter) by 32.37% as of October 2024, according to an Axios report. This adjustment suggests growing confidence in the social media platform’s potential, though significant challenges remain.
Key Valuation Insights
- Current valuation: Still 72% below Musk’s $44 billion acquisition price in 2022
- xAI connection: The markup coincides with Fidelity’s 70% valuation increase for xAI shares
- Strategic links: xAI’s Grok chatbot leverages X data and is exclusive to premium subscribers
The xAI Factor: Driving Fidelity’s Optimism
Industry analysts suggest Fidelity’s revised valuation reflects:
- Synergies with xAI: Musk’s AI startup completed a $6B Series B round earlier in 2024 with Fidelity’s participation
- Equity cross-holdings: X may hold a substantial stake in xAI, creating valuation interdependencies
- Data advantage: X’s vast dataset powers Grok’s training, creating unique competitive moats
Political and Platform Dynamics
The valuation adjustment preceded several major developments:
- Election impact: November’s presidential election saw X traffic surge but also drove users to alternatives like Bluesky
- Regulatory changes: Trump’s victory brought speculation about Musk potentially leading a new government efficiency department
Market Reaction
While the markup signals confidence, X continues to face:
- User migration: Platforms like Bluesky gained millions of users post-election
- Valuation gap: The current valuation remains far below Musk’s purchase price, indicating ongoing challenges
This development highlights the complex interplay between Musk’s ventures and how investors value their interconnected potential in the evolving tech landscape.
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