A Fidelity investment fund reviewed at the drops the value of its stake in Twitter, now known as X Holdings Corp., for the third time, suggesting the social media company is worth just a third of the $44 billion purchase price dollars from Elon Musk.
Key Points to Remember
- Fidelity is reducing its stake in Twitter, now known as X Corp.
- The investment firm considers the company worth one-third of the purchase price of Musk.
- A lower valuation may reduce Musk's net worth a bit, but has no meaningful consequences for investors
Only 0.16% of the assets of the Fidelity Blue Chip Growth Fund in April belonged to X Holdings. Fidelity valued the stake at $8.63 million in November but has since cut it twice, most recently valuing it at $6.55 million.
Since X Holdings is a private company owned by a private company, the fund determines the value of the investment for it, although it is unclear how it arrives at its valuation.
According to Bloomberg, Fidelity's valuation makes Twitter worth around $8.8 billion. This devaluation not only implies that Musk overpaid for the social media company, but it also erodes his personal net worth. Bloomberg estimates that Fidelity's valuation cost about $850 million from Musk's $187 billion net worth.
What- what does this mean for investors?
Not much, really. Twitter shareholders received $54.20 for each of their shares when Musk bought the company last year.
Investors in the Fidelity fund are not impacted as it only represents a small percentage of the fund's $32 billion in assets in April. During the month, the fund's top holdings included a 10.2% exposure to Apple (AAPL). 9.5% of assets in Microsoft (MSFT), and 7.4% of its corpus in Nvidia (NVDA). For the month of April, Apple shares rose around 3%, Microsoft shares rose 6% while Nvidia shares gained around 4%. The Fidelity Blue Chip Growth Fund gained 0.5% over the period.