Fidelity more than halves the value of its Twitter stake

Fidelity, which was part of the group of outside investors that helped Elon Musk finance his $44 billion takeover of Twitter, has reduced the value of its Twitter stake by 56% . The recalculation comes as Twitter faces a number of challenges, most stemming from chaotic management decisions, including an exodus of advertisers from the network.

Fidelity Blue Chip Growth Fund's stake in Twitter was valued at around $8.63 million in November, according to a monthly publication and Fidelity Contrafund Notice first published today by Axios. This is down from $19.66 million at the end of October.

Macroeconomic trends are probably partly responsible. Stripe suffered a 28% drop in internal valuation in July, while Instacart reportedly suffered a 75% drop in valuation this week.

But Twitter's vapid post-Musk policies clearly didn't help matters.

The network has become less technically stable lately on Wednesday due to outages after Musk made "significant" changes to the main server architecture. Twitter recently laid off employees from its public policy and engineering department, disbanding the group tasked with weighing in on content moderation and human rights issues such as suicide prevention. And the company has drawn the ire of regulators after banning - and then quickly reinstating - accounts belonging to high-profile journalists.

Again, as Dan Primack, Axios Business Editor, rightly pointed out in a tweet, Fidelity seems to rely heavily on public market performance when it comes to valuations. It's entirely possible the company doesn't have any inside information about Twitter's financial performance.

Twitter cuts abound as the company nears $1 billion in interest payments due on $13 billion in debt, while revenue plummets. A November report from Media Matters for America estimated that half of Twitter's top 100 advertisers, which spent nearly $750 million on Twitter ads this year, no longer appear to advertise on the website. Twitter is pushing its Twitter Blue plan hard, aiming to make it a bigger profit engine. But third-party tracking data suggests it's been slow to take off.

Some Twitter employees bring their own toilet paper to work after the company cut janitorial services, The New York Times recently reported, and Twitter stopped paying rent for several of its offices, including its headquarters in San Francisco.

Musk tried to save an estimated $500 million in non-labour costs, according to the aforementioned Times report, in the past few weeks he shut down a data center and launched a rummage sale after auctioning office items for the purpose of cost recovery.

Separately, Musk's team has approached investors for a potential new investment for Twitter at the same price as the original $44 billion acquisition, according to the Wall Street Journal.

A poll set up by Musk asking him if he should step down from the company's leadership closed on December 19, with users overwhelmingly voting in favor of his departure. Musk responded several days later, saying he would step down as CEO "as soon as he finds someone dumb enough to take the job" and after that would "just lead the software and server teams." .