An investment firm, Fidelity has reduced the value of its Twitter stock by more than 60 per cent since Elon Musk acquired it at the end of October. Following its funding of Elon Musk’s takeover of the social media platform, Fidelity wrote down the value of its initial stake in Twitter.
When the market value of an asset falls below its book value, which is the value at which the asset is recorded on the balance sheet, the asset’s value on the balance sheet is reduced.
Between the end of November and the end of December, Fidelity, which helped Musk finance his $44 billion takeover, reduced the carrying price of its shares by 9.58 per cent.
The new valuation cut is not as drastic as what Fidelity did after Musk’s first month on the job, when it slashed Twitter’s carrying value by 56 per cent during Musk’s first month on the job.
Fidelity, a Twitter shareholder, may not have exclusive information about the company’s performance. Every month, it revalues all of its holdings, including stock in private companies. And the valuation movement continues in the wrong direction.
The sources for this piece include an article in Axios.