Fidelity Sure Seems To Regret Its Decision To Contribute To Elon’s Wild Social Media Adventure
from the this-roller-coaster-only-goes-down dept
A few months ago we noted that Fidelity, which had contributed over $300 million to help Elon purchase Twitter a little over a year ago, had already marked down its investment by 65%. This news came out at basically the same time that Elon himself admitted the company’s value was down 56% (from $44 billion to $19 billion).
And while Elon and Linda Yaccarino keep insisting that they’re righting the ship (Yaccarino insisted the company was close to being profitable again), it does not appear that Elon’s unhinged Dealbook interview has helped. Nor his embrace of anti-Semitic conspiracy theories.
Fidelity has now updated its internal valuation of its small piece of ExTwitter equity, and admits that it’s marked it down 71.5% from what it paid for it initially. MarketWatch notes that Fidelity initially valued its own ExTwitter equity around $20 million, but currently views it at $5.6 million. (Other reports say Fidelity put in over $300 million, which, if true, would make it now valued at noticeably less than $100 million.) Either way, that’s a huge loss in just over a year.
But, more to the point, that means that Fidelity is now valuing the entirety of ExTwitter at around $12.5 billion. For what it’s worth, that appears to be less than the $13 billion in debt he saddled the company with to complete the deal. The banks who got stuck with the debt as they were unable to immediately sell it off like they usually do are (1) colluding with each other to avoid any of them selling off the debt for pennies while (2) simultaneously struggling to come up with accounting tricks to avoid taking huge losses that they know they should take. Meanwhile, it has also come out that Elon made a promise to the bankers that they wouldn’t lose any money. So that’ll be fun to sort out. (Of course, it’s also been reported that Elon Musk promised Jack Dorsey that if he ever wanted to take the equity he rolled over into ExTwitter out, Musk would pay him at the $54.20/share price he paid for the whole company — and if I’m Jack Dorsey, right now I’d be looking to make Elon live up to that deal right about now).
I may not be the richest man in the world, but I also didn’t destroy over $30 billion in value in a single company over the course of just one year through a series of incredibly, obviously, dopey moves.
Of course, it still remains somewhat incredible to me that the supposed experts at Fidelity ever thought it was worth backing Elon on this. Whatever you might say about the success of Tesla and SpaceX in increasing value for investors, from the very, very beginning of Elon’s exploration into social media, it was painfully obvious he had no fucking clue what he was doing.
Filed Under: elon musk, value destruction
Companies: fidelity, twitter, x
Comments on “Fidelity Sure Seems To Regret Its Decision To Contribute To Elon’s Wild Social Media Adventure”
Another interesting tidbit is that the drop in valuation from -65% of the original value to -71.5% happened in the space of one month – from October to November. This also means that the number is outdated by a month, which matters when the change is that rapid.
How many of you would take Xitter off of Elmo’s hands if he also had to pay you for it?
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He could promise to pay me a billion dollars for it and I still wouldn’t take it off his hands. No amount of money is worth that kind of a headache.
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Same TBH. Even moderating a chat is an exercise in dealing with the worst in human nature. Running any social media is on a whole different level of having garbage thrown at you 24/7.
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You are absolutely right.
You should hold out for no less than $13 Billion, and more likely $15 billion.
If you “bought” ExTwitter for minus $1 billion dollars, you would still be taking on not only the debts, but the lawsuits (and impending lawsuits), back wages and unpaid bonuses, and all the other liabilities saddling ExTwitter.
It’s not just a headache-in-waiting, it’s a black hole of misery and poverty. Once you pass its event horizon, your estate will never be seen again.
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Even wiping out all of the documented, and undocumented, real liabilities…it wouldn’t be worth it to take it for less than 10 Billion. Because you’re going to spend every one of those pennies trying to arrest it’s fall in the market and return it to something resembling a functioning company…let alone one that’s profitable.
To me, Ex isn’t just a dead man walking (that happened the moment he loaded it up with debt). It’s something else entirely. The Third Circle of Hell?
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I mean, I’d take that offer. Revert the blue checkmarks to fraud prevention, kick off the Nazis, bring back the original brand, get some kind of guarantee than Elon’s nowhere near the place and start making deals with the suppliers and advertisers that were there before, maybe attract back some key employees…
It would be an uphill battle but I think there’s enough momentum to make it work now. In 6 months it’s probably too far gone, but the core hasn’t completely died yet.
The rich white apartheid kid bought Twitter to turn it into a Nazi bar. Any “investors” who enabled him deserve what they get.
Re: Consequences
Part A: Many of those “investors” (scare quotes in original) are banks. If a bank fails due to this debt, some amount of the deposits are not going to be covered. Do the depositors deserve that?
Part B: FDIC covers substantial amounts of deposits in banks, backed by the US Government. That is, the taxpayers ultimately foot the bill. Do the taxpayers of the US deserve that?
Punishing the bank officers for the decision isn’t going to recover the money.
Some of the institutions holding ExTwitter debt: Morgan Stanley, Bank of America, Barclays, and Mitsubishi UFJ Financial Group Inc, Societe Generale (SOGN.PA), Mizuho and BNP Paribas (BNPP.PA). A few of those names might even be familiar to you.
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I thought there were supposed to be laws that kept the banks from doing stupid shit with depositors cash.
I mean THIS time they manage to destroy the banking industry maybe just maybe they might not get a bonus this year.
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Banks hold fractions of tge deposits, and make money lending the rest of it to other people. that’s where the money for a bank loan comes from.
Laws exist to demand how much is held, and audit those holdings, and audit the loans. But lending out your money is where a bank gets the funds to pay underpaid tellers and outrageous ceo compensation.
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Maybe they shouldn’t be loaning that money out to Nazis then.
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Isn’t fractional banking wonderful, which also has a bearing on the whole “too big to fail” when it comes to banks.
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I’m aware they have hostages, thanks.
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Banks are on the verge of “failing” every other year due to their own poor risk management. The fact that they’ve got hostages doesn’t make it any more sustainable or reasonable.
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Also, if you’ve got deposits in excess of $250k in a single bank, I literally do not give a flying fuck what happens to said excess.
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You would if that money was your retirement, or from the sale of your house and needed to buy or build a replacement.
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If they were dumb enough to keep it in one bank, that’s their problem.
If 250k doesn’t get them through retirement, also their problem. A lot of people would love to take on that problem.
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Your class envy is ugly and vile.
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Let’s try this one more time:
What an absurd “analysis” of the situation. It’s fractally ignorant: each individual piece is as dumb as the whole.
Fidelity has 4.3 trillion dollars of assets under management, a total of 11.7 trillion dollars in assets, and made 24 billion dollars in revenue in 2021. The idea that they would fail from losing their entire 20 million invest Ex and it would have catastrophic consequences for them is unhinged. I mean, we know this because they effectively have lost it all and it’s quite clear they will continue to write this off over the coming months.
Also, the FDIC discussion is a read hearing. this is the Fidelity Blue Chip Growth Fund. “Not NCUA or NCUSIF insured. May lose value. No credit union guarantee”. Any competent observer of Musk would have assessed a lot of volatility around the loan to Musk, and stress testing would have prevented it from taking down the the fund.
But even if it was true that they could fail, and this actually was insured, the FDIC would be the receiver of the bank and would liquidate the assets to cover their loss for covering the depositors. Investors would lose first.
Your analogy might be the dumbest fucking use of that quote I’ve ever seen. Musk owes the bank a buck, and it is very much his problem.
Finally: absolutely, unequivocally, yes bank officers should suffer the consequence of their dumb ass decisions. They won’t. But they should. Suggesting otherwise is fucking offensive.
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Amen to this.
Does anyone remember when the 2008 recession ended? I sure as hell fucking don’t. The costs of living haven’t gone down. The labor market isn’t any friendlier. The income gap certainly isn’t getting any smaller. The financial institutions still have everyone’s balls or clits in a vise.
This idea that people in finance and investment shouldn’t be made to suffer the consequences of their actions is precisely why scams are so rampant – the consequences rarely happen.
A Person thats supposed to know business?
If it walks like a.
If it sounds like a
If it Looks like a.
If its Colored Like a.
It could be loons or divers, grebes, gallinules and coot.
There are lots of Ducks out there.
And I would like to believe that the Common person could tell you that they are ALL over valued, and into money laundering.
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None of those birds have much relationship to ducks, calling the such is like calling X-itter a social media site, now that it has become anti social.
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Looks like a Dodo.
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Another Flareup
You spent all of 2023 cheerleading for the collapse of X-Twitter, but I guess its demise wasn’t as imminent as portrayed. Maybe 2024 will be the year. But I say your time would be better spent vowing to cure your case of EDS.
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Never mind, guys. He killed 72% of its value, which is pretty significant destruction. I’m a fucking moron.
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flag this comment
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Consider your comment flagged.
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He’s going to be spending time worrying about which large private generic speech platform will be the next to do away with the left-wing censorship he loves so much, perhaps as they navigate worries over the next Trump presidency. So heartbreaking!
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Fixed it for you.
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You’re sitting there pretending Musk didn’t cut the value of exTwitter by over two thirds in the course of a year. Derangement, indeed.
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Nearly three quarters (75%), in fact.
Bankers’ money or banks money?
People are crazy to live on a promise, but they are dumb to believe in a promise.
If only there were signs that could have told the banks that trusting Elon to be both good at business and hold up his side of a deal might not be the best idea…
Your class envy is ugly and vile.
That’s not class envy, it’s just recognizing stupidity. It’s the financial equivalent of putting gas in grocery sacks in your trunk. Everyone around is just not making eye contact and backing away because it’s so monumentally ill informed.
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Try getting someone to pay you with multiple checks or transfers into multiple accounts, or buying a house by making payments from multiple accounts. Also, try managing your finances when they are spread over multiple accounts.
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Most of that is automated now, it really couldn’t be easier.
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I’m pretty sure you have no idea how any of this works if you think that is a good reasons to forgo free insurance on your money. To the point where I wonder if you’ve actually used a modern banking system.
Multiple accounts, both in and out, is a core function of what escrow business do during cash purchases And if you’re not using an escrow service you’re either made of money and can pay people to think of these things for you, or you’re about to get ripped off.
This is also a common thing when people retire and get multiple lump sum payments from a couple companies that need to go to multiple banks. Bread and butter of a financial services company.
There are brokerage accounts that advertise addressing this by automating the process, such as https://www.wealthfront.com/cash-account-participant-banks
Finally, contrary to popular belief, FDIC isn’t coverage for an account up to to 250k. It’s ” $250,000 per depositor, per insured bank, for each account ownership category.” Meaning if you have a spouse on your savings account, it’s 500k. There’s also like 8 ownership categories or something, so in theory the number is much higher per person…through it’s not clear to me you could ever get all of theme combined.
Managing finances over multiple accounts is no more difficult than making purchases with multiple credit cards. They are all on line, you can easily link them for near instantaneous transfer of funds, and I’ve done it in the past to no harm.
And shit, who makes purchases from their savings or checking account directly? For a car, that’s about all I can think of, and I frankly would just get the cheapest financing I can from the dealer and pay it off on the first bill. They will happily cash checks from multiple sources against one account. Same with credit cards.
This is similar logic that leads people to forging the employer match on their 401k, because “they can do better”.
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You guys are so seethingly envious of Musk it’s hilarious.
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What is there to envy? Musk made a stupid business decision based on a whim, was forced to pay an exorbitant amount of money for something he didn’t actually want, made even dumber decisions on the pursuit of “freeze peach”, and tanked the valuation of the company by at least 60% in a year.
The fact that you think the writers around here are envious of something like that says more about you than it does about them.
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Don’t be obtuse, you stupid fucking moron.
Musk is the richest man in the world, with unlimited resources and able to do anything he wants and help whomever he wants. He’s already achieved more and done more good in his life than Mike will do in 1,000 lifetimes. That’s why this blog is solely focused on attacking and abusing Musk–envy.
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Your sense of nuance is that of a child.
Musk is rich, yes, but he also has responsibilities that few people dream of, let alone would be able to handle. Just look at the shitshow with Twitter.
Clearly, Musk can’t do just “whatever he wants”.
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If he truly had “unlimited resources”, he wouldn’t have needed the banks. In truth, he usually doesn’t have a lot of petty cash lying around.
Also, if there’s one tech entrepreneur of South African descent whom I’m actually envious of, it’s Mark Shuttleworth.
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Hah! What fantastic cope! Yes, Elon Mush’s resources really aren’t that great because all his assets aren’t liquid!
You’re pathetic.
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I’m only sorry that I’m not engaged in Elon-worship. Are you saved?
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That’s fucking exactly how it works, you mouthing breathing fuckwit. There’s even a term for it “Illiquidity discount”.
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You Musksuckers are genuinely some of the most predictable punching bags ever.
When people disagreed with him over what he was doing with Twitter you brag about how much money he brings in. When it was proven that he was, in fact, losing the company money, you brag that it was never about the money. And then when it’s proven that advertisers continue to flee the platform and not give him money you brag that he’s still somehow the richest man on the planet even when stats beg to differ.
You guys simp for Musk harder than old fatasses simp for Pokimane, and that’s saying something. But please keep embarrassing yourselves. It’s going to be funny as fuck when Musk inevitably snorts a little too much of his allegedly prescribed ketamine, champ.
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…hallucinated no mentally competent human, ever.
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If you honestly believe I’m envious of Musk for owning a social media site that fewer and fewer people, including celebrities, want to use, that’s just projection on your part.
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I think it’s clear at this point that Elon Musk – in addition to being a Nazi cocksucker – is a retard. He should be bullied at every possible opportunity. Hopefully he’ll kill himself, which would be a wonderful outcome for the world.
Funny how no one at these banks and especially fucking Fidelity hasn’t lost their jobs over this. If any normal person fucked up at even a fraction of this kind of dollar amount they probably would be shit canned faster than a CEO can shit in a golden toilet.
It makes me even more disgusted that my company switched to Fidelity for their 401k management from a different company a few years ago. Clearly they willingly blinded themselves to the very public evidence this was going to be a disaster.