Value of Elon Musks X rebounds to $44bn purchase price

In a surprising reversal of fortunes, Elon Musk’s social media platform, X, has regained its $44bn valuation, the price he initially paid when acquiring the platform, formerly known as Twitter, in October 2022. This new valuation was established during a recent secondary deal, where investors exchanged existing stakes in the company according to reports from the Financial Times.

The recovery comes after months of financial challenges for the platform. Fidelity Investments, a key investor, had valued X at just $10bn as recently as September. X has also embarked on a primary funding round with the goal of raising $2bn to address over $1bn in junior debt.

Since Musk’s takeover, X has undergone significant transformations. Shortly after acquiring the platform, Musk initiated substantial changes, loosening moderation policies that caused major advertisers to withdraw, citing brand safety concerns. These challenges prompted the platform to take legal action last year against several global companies, including Unilever and Mars, accusing them of unlawful collusion in pulling advertising.

The platform’s profitability has seen improvement despite these obstacles. It recorded adjusted profits of $1.2bn last year, showcasing some success in its cost-cutting and operational strategies under Musk’s leadership. The newly realised valuation has also been attributed to a boost in investor confidence, particularly after Musk assigned a 25 per cent stake in his artificial intelligence start-up, xAI, to lenders. The AI start-up is now valued at $45bn, providing additional financial stability.

Investors such as Andreessen Horowitz, Sequoia Capital, and 8VC will also see benefits, with the platform’s turnaround potentially setting the pace for future growth. Despite remaining controversy and reduced revenues since Musk’s takeover, the balance sheets reflect increasing optimism for X’s future.

Musk’s personal fortunes have shifted as well. His stake in SpaceX, worth approximately $147bn, has now surpassed Tesla as his most valuable financial asset due to falling valuations of the latter. Musk’s net worth remains formidable, standing at an estimated $323bn according to Forbes.

The valuation recovery for X signals an important milestone, but observers remain divided on the platform’s long-term trajectory. With ongoing legal disputes and competition from emerging rivals, maintaining stability and growth will remain a significant challenge moving forward.