What Do Musk's X/Twitter Investors Think Of His Leadership?
What Do Musk's X/Twitter Investors Think Of His Leadership?
Here's a hint, they are utterly pissed off!
It’s safe to say that Musk’s handling of Twitter, now X for some unknown reason, has been subpar. Users have been leaving the site in droves, all major advertisers have abandoned it, fearing they will be associated with neo-Nazis if they stay, the site has been banned in Brazil, and the UK and EU are gearing up to hold Musk accountable for the vast increase in hate speech and Russian propaganda on the site. Twitter is a hollow husk of what it once was; this, combined with the towering debt brought on by Musk’s purchase and the nose-diving revenue caused by his woeful leadership, has crippled the value of this once giant of the social media world. With all of this in mind, you have to wonder what the investors think of all of this and how this will impact Musk down the line.
Well, Fidelity, a venture capital company that paid $316 million to join Musk’s takeover, recently let slip just how much money they think they have lost. Recent documents show they now value their stake in the company at $88 million, 72% less than what they bought it for! Yikes… This means they think X/Twitter is now only worth $12.32 billion, meaning Musk has lost a staggering $31.68 billion in two and a bit years, according to one of his main backers!
This is actually worse than the news outlet Axios calculated, which recently estimated X/Twitter has only lost $24 billion in value. Axios is far from a Musk-friendly organisation, so the fact that Fidelity values their stake so negatively speaks volumes as to their opinion of Musk’s leadership.
Another investor, this time a private individual, Ross Gerber, is far more vocal. He paid $1 million to back Musk, but has now publicly declared his stake in the company worthless. He even went on to say, “Elon’s done a tremendous amount of wealth destruction since he purchased Twitter.”
Now, $1 million is a drop in the ocean for this $44 billion purchase. However, the fact that Musk had to turn to investors like Gerber demonstrates how desperate he was to raise this money and not sink his own giant wealth into this garbage fire of a business move.
Upon the revelations of Fidelity, Axios and Gerber, all the major venture capital investment firms that backed Musk, were asked what they thought of the company’s current value by numerous media outlets. All of them refused to comment. This is far from ordinary, as VC firms are usually keen to defend their investments and bolster the company by giving them good coverage in the guise of praise. The fact they have decided to stay quiet shows they doubt that X/Twitter can get any positive coverage right now, or that they can’t say anything even remotely positive about X/Twitter, even with their army of spin doctors.
But, there is one happy investor. But his happiness is damn suspicious.
Prince Alwaleed of the UAE is the biggest investor in Musk’s Twitter takeover. He recently stated that he values his stake at $1.9 billion, the same he paid for it back in 2022. In fact, he even said this was a “conservative” estimate. He has even publicly defended Musk’s leadership.
However, why is Alwaleed such an outlier? Well, he is a prince in an authoritarian, non-democratic country (the UAE) that is very conservative and has one of the world’s largest state-owned fossil fuel companies. Needless to say, Musk’s destroying moderation on X/Twitter has dramatically helped his political goals. The climate disinformation, antisemitism, pro-Russia propaganda and far-right propaganda, which is now rife on the site, are helping them sell more oil, undermine climate progress, and gain a stronger position of power in the Middle East. When you take this into account, it’s easy to see why Alwaleed would be happy to spend nearly $2 billion to effectively outsource his country’s propaganda machine.
So, the only investor happy with Musk is likely only happy because Musk has turned the site into a dumpster fire that benefits them.
So, why does this matter?
Well, how do you think Musk has been able to grow Tesla and Starlink over the past decade? Well, he earned a reputation for being the guy to invest in, as almost every one of his high-risk projects paid off massively! As such, he gained an uncanny ability to raise funds and debt to pay for insane projects, as banks and investors believed he couldn’t fail. Well, he has now failed on a scale never seen before in business, massively tarnishing this essential reputation. While Tesla and SpaceX are now mature companies with their own slush funds, they will still need investors and loans to pay for future development. Tesla will need billions upon billions of dollars to pay for Model 2 and robotaxi development and rollout. SpaceX will also need billions of dollars to pay for the promised expansions of Starship and possibly even Starlink. But how can investors and banks trust him now? He is no longer their golden child. As such, Musk’s horrific handling of X/Twitter could severely hamper the future of any of his companies.
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Sources: WP, NYP, The Guardian, Inc