Damn, this is funny! Deserves an award for whatever award they give out for this kind of thing.
Fidelity has reduced the value of Twitter by a little over half from 20ish billion to 9ish billion.
Million, per that story. They apparently have a fairly small stake. This is them reporting a loss (or reduced profit) on their ledger.
You’re right, sorry, I had my Bs and Ms mixed up. I’ll blame it on being sick.
That was the whole point of the Elmo Hooray 3-in-1 Potty! I envisioned, for instance, the Potty saying “I will establish a Twitter Trust and Safety Council”, followed by a flushing sound. We could also license the voice of Carl Sagan intoning “billions and billions”, followed by a flushing sound. The possibilities of the Elmo Hooray 3-in-1 Potty are endless!
That a very optimistic mark-to-market.
Even absent Elon, look at what the rest of the tech sector has done since he made his offer in April. Even if Elon had not bought it, Twitter would be down by 30% or more.
With the Elon clusterfuck I’d say they’d be lucky to find someone to pay them 25% of what they paid for their stake.
ETA: Actually, reading the article, that 56% markdown is relative to where they marked it in October. That would already have been well below the actual buyout price.
I always assumed that they just take the close-of-market price on whatever day of the month they report the fund value? Private equity they need to set a value based on whatever they use to set the value, but a publicly traded stock seems pretty easy, no?
Yeah. Color me confused about the accounting substance of the announcement.
I know a lot of Tesla owners. All but one of them really like playing with technology. The other is a longtime EV proponent, who was buying custom EV vehicles when there weren’t any mass-marketed ones.
The last one i spoke with was apologetic, but still likes his car. (he was giving me a ride in a rental car, and kept complaining about features it didn’t have that his Tesla has.)
His take was that Musk makes products that appeal to musk. My friend and Musk have similar preferences re cars, so he likes the car. They have very different preferences re social media, so my friend is cranky about what Musk has done to Twitter. He lights out that the preferences of a celebrity with a zillion followers are very different from the preferences of most people who use Twitter.
Twitter is no longer publicly traded.
You might not like Musk but you can’t take his achievements away from him.
For instance, being the first person in history to lose $200 billion in net worth
Elon Musk was the second person ever to amass a personal fortune of more than $200 billion, breaching that threshold in January 2021, months after Jeff Bezos.
The Tesla Inc. chief executive officer has now achieved a first of his own: becoming the only person in history to erase $200 billion from their net worth.
Musk, 51, has seen his wealth plummet to $137 billion after Tesla shares tumbled in recent weeks, including an 11% drop on Tuesday, according to the Bloomberg Billionaires Index. His fortune peaked at $340 billion on Nov. 4, 2021, and he remained the world’s richest person until he was overtaken this month by Bernard Arnault, the French tycoon behind luxury-goods powerhouse LVMH.
That means Musk owns the whole thing, doesn’t it? In that case, how does Fidelity even have a stake?
Musk’s holding company “X Holdings I Inc” is the new owner of Twitter, having bought all of the publicly traded Twitter shares when the deal went through. Some investors who held Twitter shares decided they wanted in on the deal as a continuing private investment, so they “rolled over” into an interest in the new holding company. It looks like the Saudi fund (5% interest) and Dorsey (2.4%) were two big ones. I’m not sure if the information is all public, but it doesn’t look like it amounts in total to more than 10%, so Musk owns most of it.
There was also substantial debt involved in the purchase, I don’t know all the details of that, whether it’s all junk secured only against the value of the business or whether any of it is secured against Musk’s other assets.
If Fidelity now want out, they need to sell their private investment in X Holdings I Inc, so their mark-to-market should be what a hypothetical private equity investor would pay for that.
Next year this time, I expect Fidelity to value their investment in Twitter as “One bucket spit, warmed”
The article refers to Nov month end. It might well be that they have more stringent criteria for valuation at year end, that could be interesting.
To add to this clarification, the markdown in this story is about a single Fidelity fund that has private ownership in Twitter. Each fund has to assess and adjust the value of their private holdings. Fidelity is supposed to have invested $316M in Twitter so there are many other funds to update.
Anecdotal to be sure but my feed is a hot disjointed mess today. If I was a suspicious person, I might suspect that I’m getting fucked with. Wait, I AM a suspicious person; I’m getting fucked with.
Then it may be your own fault. Twitter may have an algorithm to detect suspicious people and fuck with them.
Most likely, as we can figure out and would do ourselves, they’re just declaring the loss as to offset some gains elsewhere. A 56% loss through November sounds about right, and their stake is so small the entire holding is a rounding error in the grand scheme of things.
One thing this does for them is allow Fidelity to take a PR position that they take compliance and risk management seriously - “why, our compliance rules are so strict we even immediately started taking losses on Twitter!” Now, this might be bullshit on a company-wide scale, but a story like this will get noticed (Fidelity will make sure of this) by regulators. I mean, who do you think fed the press this story? 
Hell, to me, the above reason alone is worth an $11 million loss.
I think you’re reading too much into it. It wasn’t an “announcement”, some diligent reporter pulled it out of a routine monthly disclosure, because obviously the world is fascinated by the clusterfuck and seeing how much value Musk has destroyed.
It’s a completely routine matter that positions must be marked to market, and nobody would expect anything less from any reputable firm. Fidelity seeking PR from rigorously marking positions to market would be like a law firm advertising that conversations with clients are confidential. It would be more like - WTF - why do you feel the need to say that?
And again, the 56% is only since October month end, which I’m sure would already have been marked well below the buyout price. I don’t know how dire the debt situation is for equity participants, but I doubt that there’s any private equity bid better than 25% of the buyout price, even that is probably optimistic. It’s likely that the debt means that it must be restructured to avert complete collapse, and current equity holders are left with almost nothing.