The value of the social media platform X, formerly known as Twitter, has plummeted by over 75% since billionaire Elon Musk acquired it two years ago. This significant decrease was revealed in a recent disclosure report from Fidelity’s Blue Chip Growth Fund, which invested in the platform at the time of its acquisition.
In July 2024, Fidelity reported that its equity stake in X was valued at just $5.5 million (€4.96 million). This stands in stark contrast to the initial investment of $19.66 million (€17.73 million) that Fidelity made when Musk purchased the platform. Based on this data, the current total valuation of X is estimated at $9.4 billion (€8.48 billion), which is a drastic reduction from the $44 billion (€39.6 billion) Musk paid for it in October 2022.
This stark decline has raised questions about the future of X and how its transformation from Twitter to its current form has impacted its financial stability and brand identity. Let’s take a deeper look at the key decisions that contributed to this dramatic loss in value and how Musk’s ownership has shaped the platform.
Why Has X’s Value Dropped?
Initially, when Musk announced his plans to acquire Twitter in 2022, the value of X’s shares surged by about 22%. This spike was attributed to excitement and speculation about the changes Musk might bring to the social media giant. Many saw his bold vision for the platform as a potential game-changer. However, this initial optimism quickly faded after Musk made a series of controversial decisions that had far-reaching consequences for the platform’s users, brand reputation, and financial standing.
The Rebranding from Twitter to X
One of the most polarizing decisions Musk made was to completely rebrand Twitter to X. This rebranding involved changing the platform’s name, logo, and identity, which was a risky move given Twitter’s strong brand recognition. Twitter was one of the most iconic social media platforms globally, with its signature blue bird logo instantly recognizable.
Rebranding such a widely recognized and established brand carried enormous risks, and many experts questioned whether this was the right move. For years, Twitter had built a loyal user base that associated the platform with its distinct name and branding. By changing the name to X, Musk disrupted the platform’s familiarity and brand loyalty.
This decision caused confusion among users and led to widespread criticism from marketing and brand experts, who argued that the Twitter brand was too valuable to change. They emphasized that rebranding a platform that had become synonymous with real-time news and communication was a gamble that might not pay off.
The Overhaul of X’s Verification System
Another significant decision that caused controversy was Musk’s complete overhaul of the platform’s verification system. Under Twitter’s previous management, verification was granted to certain users—typically public figures, celebrities, journalists, and other notable individuals—who were at risk of impersonation. These verified users were given a blue checkmark next to their names to indicate their authenticity.
The verification system was implemented in 2009 after Tony La Russa, then-manager of the St. Louis Cardinals, sued Twitter over an account that used his name to mock drunk driving deaths. The blue checkmark became a symbol of credibility, making it easier for users to identify authentic accounts.
However, after Musk took over the company, he decided to change the verification system entirely. He introduced a subscription-based model, where users could pay for verification. The blue checkmark, once reserved for high-profile users, became available to anyone who subscribed to X Premium, a paid service. This move drew criticism for devaluing the significance of verification, as it was no longer tied to authenticity but rather to a user’s willingness to pay a fee.
Additionally, Musk introduced other types of checkmarks. Grey checkmarks were assigned to government-affiliated accounts, and gold checkmarks were made available to businesses, which could purchase them for a fee. Initially, the gold checkmark cost $1,000 per month, but this price was later reduced to $200 in January 2024.
The overhaul of the verification system created confusion and dissatisfaction among users. Many felt that the blue checkmark, once a symbol of credibility, had lost its meaning. Critics argued that making verification available to anyone who could pay undermined the platform’s trustworthiness and allowed for the potential spread of misinformation.
Advertisers Abandon X Over Content Concerns
While the rebranding and verification changes were controversial, one of the biggest blows to X’s financial health came from the mass exodus of advertisers. The platform relied heavily on advertising revenue, and the loss of major brands significantly impacted its bottom line.
In 2023, several major advertisers, including Apple, Coca-Cola, and Disney, removed their ads from X following a series of concerning incidents. One of the key moments that led to this decision was Musk’s endorsement of an anti-Semitic post, which sparked outrage among users and advertisers alike.
In response to this and other controversies surrounding the platform’s content moderation policies, many brands felt that X was no longer a safe or appropriate space for their advertisements. Advertisers were particularly concerned about the rise of hate speech, misinformation, and Nazi-related content on the platform, which had increased under Musk’s leadership.
Other prominent companies, such as IBM, Comcast, the European Commission, and the World Bank, also withdrew their advertising from X due to similar concerns. The platform’s inability to address these content issues led to a significant decline in ad revenue, which further exacerbated its financial struggles.
Cost-Cutting Measures: Relocating X’s Headquarters
As X’s value continued to decrease, the company took several cost-cutting measures in an attempt to stabilize its finances. One of the most notable actions was the decision to move its main office from San Francisco, California, to Bastrop, Texas.
San Francisco had long been the heart of Twitter’s operations, but the high costs associated with maintaining offices in the city prompted Musk to consider more affordable alternatives. Bastrop, a small town in Texas with a population of just 9,688 according to the 2020 US Census, became the new home of X’s headquarters.
The move to a smaller town was seen as a way to cut expenses, but it also highlighted the extent of the financial challenges facing the company. Relocating from a major tech hub like San Francisco to a rural town in Texas was a significant shift that underscored the platform’s efforts to reduce costs.
Why Did Musk Buy Twitter?
Elon Musk’s acquisition of Twitter in 2022 was one of the most high-profile business deals in recent years. Musk initially entered negotiations with Twitter in April 2022, offering to buy the company for $54.20 (€48.89) per share. His goal was to take the platform private and implement his vision for its future.
After several days of discussions, Twitter accepted Musk’s offer, and the deal appeared to be moving forward. However, in July 2022, Musk attempted to back out of the acquisition. He claimed that Twitter had violated certain parts of their agreement by refusing to provide data on spambots and by making staffing changes without his consent. Specifically, Twitter had fired high-ranking employees and laid off one-third of its talent acquisition team.
In response, Twitter filed a lawsuit against Musk, seeking to enforce the deal and compel him to complete the purchase. The legal battle was set to go to trial, but before the case could be heard, Musk reversed his position and agreed to go through with the acquisition. In October 2022, he completed the purchase at the original price, paying $44 billion (€39.6 billion) for Twitter.
X’s Future Under the Leadership of Linda Yaccarino
While Elon Musk remains the owner of X, he appointed Linda Yaccarino as the platform’s CEO in May 2023. Yaccarino had previously served as the head of global advertising and partnerships for NBCUniversal, making her an experienced leader in the advertising industry.
Yaccarino’s appointment was seen as an attempt to address the platform’s advertising challenges and rebuild relationships with major brands. However, the road to recovery remains uncertain, as X continues to face difficulties in regaining advertisers’ trust and stabilizing its revenue streams.
What Lies Ahead for X?
The future of X remains uncertain. While Elon Musk’s bold vision for the platform aimed to transform it into something new, the controversial decisions made during his ownership have significantly impacted the platform’s value and reputation.
The exodus of advertisers, the backlash from users, and the rebranding challenges have all contributed to X’s financial woes. While the relocation of the headquarters and the appointment of a new CEO are efforts to address these issues, only time will tell whether X can recover from its dramatic decline in value.
As the platform continues to evolve, it will need to navigate the complex challenges of content moderation, brand identity, and advertiser relationships if it hopes to regain its place as a leading social media platform. For now, the once-iconic platform that revolutionized real-time communication faces an uncertain future under Musk’s ownership.
