Elon Musk, the richest person in the US, is being treated as a cost-cutting genius by many people – including newly elected President Donald Trump. That’s why Trump has put Musk and Vivek Ramaswamy in charge of coming up with plans to drastically cut federal government spending.
But if you look at what’s happened to the value of in a financial struggle. fiasco for him and his 19 co-investors.
It’s important to understand what Musk accomplished at X, because he will try to do to America what he did to Twitter. And the enormous mess Musk has created at X has not received nearly the attention it deserves.
Here’s a reminder.
According to the latest available figures, which we’ll see in a moment, Musk and his co-investors lost more than $25 billion in their acquisition of Twitter. That’s right. Over $25,000,000,000.
How can I know that if X is a private company that does not publish financial results? That’s because Musk’s co-investors include the Fidelity group of mutual funds. You see, Fidelity must value its funds’ investments in
According to Fidelity’s financial filings, the fund’s stake in X has lost nearly 80% in value since Musk’s acquisition. For example, Fidelity’s Contrafund (FCNTX) valued its stake at $53,469,000 when Twitter changed to
That is a decrease of 78.7%.
Buying Twitter was a $46.5 billion deal: $44 billion went to shareholders and about $2.5 billion went to expenses. Musk and his co-investors put about $33 billion into the acquisition, while X borrowed the remaining $13.5 billion.
Apply a 78.7% decline to that $33 billion investment, and you see Musk and his co-investors are down about $26 billion. Of this, approximately $20.4 billion is Musk’s share of the loss, and the remaining $5.6 billion is the co-investors’ loss.
Obviously, I can’t prove that Musk cutting 80% of Twitter’s workforce is responsible for the nearly 80% loss suffered by Musk et al. Nobody can do that. But the erosion of the labor force and the subsequent erosion of the value of
