https://www.washingtonpost.com/technology/2024/09/01/musk-twitter-investors-underwater/
(article transcribed below)
When Elon Musk bought Twitter and renamed it X, he didn’t do it alone. Though the billionaire tapped his vast wealth to cover the lion’s share of the $44 billion purchase price in 2022, he also relied on bank loans and a long list of investors, the full extent of which was only recently revealed.
At the time, analysts marveled at Musk’s ability to attract dozens of enthusiastic partners. Saudi Prince Alwaleed bin Talal, who rolled nearly $2 billion in Twitter stock held by himself and a Saudi holding company into the private deal, tweeted at Musk: “I believe you will be an excellent leader for @Twitter to propel & maximise its great potential.”
Two years later, Alwaleed says he is still happy with his investment. But to others, the deal looks significantly less appealing. Under Musk, X’s valuation has cratered — as Musk has acknowledged — leaving it worth as little as half of what he paid.
Since late last year, Fidelity has consistently valued the X stake in one of its funds 70 percent below the purchase price, a drop in valuation first reported by Axios. Figures released Friday show that Fidelity now values that stake about 72 percent lower than when Musk took over X, taking its overall portion of the company from a valuation of around $316 million to $88 million.
Based on a Washington Post analysis using Fidelity’s estimates, the eight largest initial investments that were reported to the U.S. Securities and Exchange Commission or otherwise publicly disclosed are worth about $5 billion less than when Musk bought X. His and his partners’ overall stake has shed $24 billion in value — a vaporization of wealth that has little parallel outside the realm of economic or industry-specific crashes, or devastating corporate scandals.
All but the second-largest investor declined or did not respond to a request for comment for this article. Fidelity declined to comment. Musk and X did not respond to requests for comment.
Among those shouldering the burden: Saudi and Qatari business leaders and royalty; Silicon Valley venture capital and tech investors; and Twitter co-founder and former CEO Jack Dorsey. Musk took out loans to cover the rest of the deal, borrowing more than $12 billion that banks have not been able to offload, news outlets have reported.
“Elon’s done a tremendous amount of wealth destruction since he’s purchased Twitter,” said Ross Gerber, who said he invested less than $1 million, a stake he now considers worthless.
“For the people who put capital into him for any amount,” Gerber said, “ … trying to explain to people how he lost” so much money “is not a fun conversation.”
Among top investors, Dorsey — whose stake has lost an estimated $720 million — has made his displeasure known. Last year, he said Musk shouldn’t have purchased Twitter after all, posting on social media that he didn’t think Musk “acted right after realizing his timing was bad.”
“It all went south,” Dorsey said.
But Alwaleed, X’s biggest investor after Musk himself, said in an interview with The Post that he values his and Kingdom Holding Co.’s X stake the same as when Musk took over the site: $1.9 billion, a figure he said was a “conservative” estimate.
“In our books, on my books personally, we are valuing at minimum [at] the entry level that we entered with,” he said last week. “There’s no devaluation whatsoever.”
The largest investors — those with stakes of $250 million or more — received the right to confidential business information as part of the deal, prompting concerns in Washington about the involvement of entities associated with foreign governments and their potential access to user data. Alwaleed said he received no concessions or formal influence as part of his agreement to invest, calling his motives purely financial. A spokesperson said Alwaleed and Kingdom Holding Co., which the prince chairs, receive the same set of business information available to other X and xAI investors.
Alwaleed, who said he and his team are in frequent contact with Musk, X CEO Linda Yaccarino and Jared Birchall, head of Musk’s family office, said outside valuations that suggest massive losses do not take into account X’s bets through xAI, Musk’s artificial intelligence start-up. Alwaleed and Kingdom Holding Co. have become one of xAI’s largest investors.
“When you evaluate X, you have to evaluate their ownership in xAI of 25 percent,” Alwaleed said. He also said X needs to prioritize revenue. “Clearly, the game right now is monetization, having advertisers coming to X.”
As a major shareholder in Twitter, Alwaleed initially opposed Musk’s purchase — not because he was “against Musk,” he said, but because he thought Musk’s offer of $54.20 per share was too low.
“My first call with Musk was: I was fighting to stay in the company,” he said, citing his belief that Twitter was worth more.
Because Musk turned Twitter into a private company, it’s hard to know its up-to-the-minute valuation. But some things about its financial picture are clear: Advertisers, its key source of revenue, fled after controversies — some caused by Musk himself. Some advertisers were also put off by his decision to gut content moderation while restoring thousands of accounts previously suspended for breaking the site’s rules.
The deal has also faced scrutiny. The SEC has an active fraud probe into Musk’s purchase of the site, examining his early accumulation of Twitter shares without disclosing his investment — a move that could have affected the share price. Some investors have received subpoenas as part of the probe.
Here are the largest initial investors in the deal, and what their stakes were worth when they bought in and what they’re worth today, extrapolating from Fidelity’s calculations.
Elon Musk
Investment: $33.5 billion commitment, consisting of Tesla shares and his own wealth, along with co-investors, including those listed below.
2024 value: $9.38 billion
Difference: -$24.12 Billion
Public comment, April 25, 2022: “[I] want to make Twitter better than ever by enhancing the product with new features, making the algorithms open source to increase trust, defeating the spam bots, and authenticating all humans,” Musk said in a news release. “Twitter has tremendous potential — I look forward to working with the company and the community of users to unlock it.”
Musk and X did not respond to requests for comment.
Prince Alwaleed bin Talal (and Kingdom Holding Co.)
Investment: $1.89 billion
2024 value: $529.2 million
Difference: -$1.36 billion
Public comments at the time:
After first publicly rejecting the offer on April 14, 2022, the prince embraced a deal May 5, 2022: “I believe [Elon Musk] will be an excellent leader for @Twitter to propel & maximise its great potential @Kingdom_KHC & I look forward to roll our ~$1.9bn in the “new” @Twitter and join you on this exciting journey.”
Alwaleed declined to disclose the specifics of his conversations with Musk leading up to his investment but said he was “fighting to stay in the company” because he believed Musk’s initial offer was too low.
“We are very happy with the alliance with Mr. Musk,” Alwaleed said, adding that he continues to see massive upside to his investment. “We categorically reject any discount to [the] company.”
Jack Dorsey, Twitter co-founder and former CEO
Investment: $1 billion
2024 value: $280 million
Difference: -$720 million
Public comments on April 25, 2022: “In principle, I don’t believe anyone should own or run Twitter. It wants to be a public good at a protocol level, not a company. Solving for the problem of it being a company however, Elon is the singular solution I trust. I trust his mission to extend the light of consciousness.”
Dorsey did not respond to a request for comment but publicly expressed regret after Musk’s purchase.
Larry Ellison, Oracle co-founder and board chairman
Investment: $1 billion
2024 value: $280 million
Difference: -$720 million
No public comments at the time.
Ellison did not respond to a request for comment.
Sequoia Capital
Investment: $800 million
2024 value: $224 million
Difference: -$576 million
No public comments at the time.
Sequoia did not respond to a request for comment.
Vy Capital
Investment: $700 million
2024 value: $196 million
Difference: -$504 million
No public comments at the time.
Vy Capital did not respond to a request for comment.
Binance
Investment: $500 million
2024 investment value: $140 million
Difference: -$360 million
Public comments, May 5, 2022: “We’re excited to be able to help Elon realize a new vision for Twitter,” said Binance’s then-CEO, Changpeng Zhao.
Binance did not respond to a request for comment.
Andreessen Horowitz
Investment: $400 million
2024 value: $112 million
Difference: -$288 million
No public comments at the time.
Horowitz did not respond to a request for comment.
Qatar Investment Authority
Investment: $375 million
2024 value: $105 million
Difference: -$270 million
No known public comments at the time.
Mansoor Bin Ebrahim Al-Mahmoud, the CEO of the Qatar Investment Authority, expressed support of Musk last year, Bloomberg News reported: “We trust his leadership in terms of turning around the company,” he said.
The Qatar Investment Authority declined to comment.
Methodology
Fidelity recently valued what was initially a $19.66 million Twitter stake in its Blue Chip Growth Fund at about 72 percent less than when Musk purchased the social media company, a valuation that has remained relatively steady. The Post applied the 72 percent drop to the initial investor stakes reported in filings to the SEC, or revealed in public comments and individual confirmations of entities’ involvement.