Benzinga - by Chris Katje, Benzinga Staff Writer.
Twitter, the social media platform now known as X, is valued less than Elon Musk’s original purchase price of $44 billion.
However, one of the key backers of the deal continues to raise X's value.
What Happened: Musk funded a portion of the Twtitter acquisition by selling a portion of his shares in Tesla, Inc (NASDAQ: TSLA). Some experts said the overhang hurt shares of the electric vehicle company.
Musk also scored financial backing from Fidelity Investments, which kept its stake since the transaction closed in November 2022.
Fidelity currently holds a position in the Fidelity Blue Chip Growth Fund mutual fund, which is traded as FBGRX.
After marking Twitter/X at a discount once the deal was done, Fidelity has been increasing the valuation of the social media platform. Axios reports that Fidelity raised the valuation of its stake by 8% in July.
This marked the third straight month that Fidelity has bumped up the valuation of its Twitter/X holdings. For the month ending June, Fidelity previously raised the valuation by 11%.
According to Axios, Fidelity is still valuing Twitter at a 58% discount.
Along with its stake in privately held X Holdings, the Fidelity Blue Chip Growth Fund also owns stakes in some of the most well-known private companies like SpaceX, Fanatics, Stripe, Reddit, Epic Games, Instacart, Redwood Materials, MOD Pizza and Relativity Space.
Related Link: Elon Musk's Reasons For Buying Twitter: 'I Didn't Do It To Make Money, I Did It To Try To Help Humanity'
Why It’s Important: Once the acquisition — financially backed by the likes of Binance, FTX CEO Sam Bankman-Fried, Twitter co-founder and former CEO Jack Dorsey and Ark Funds — was completed, Fidelity began cutting the valuation.
The Boston-based company had either cut or held the valuation steady for six months straight prior to the month ending report for May, which saw an increased valuation.
News of Fidelity's increasing their valuation caught the attention of Musk.
“Fidelity will make a great return in the end,” Musk tweeted in response to the Axios report.
When it did business as Twitter, X was valued at $20 billion when stock awards for the company’s employees were announced in March 2023. While the valuation of the stock awards was less than half the price Musk paid, the then-CEO said he was optimistic about the company.
Musk said at the time that he saw a “clear, but difficult, path” to a future valuation of more than $250 billion for X.
Musk has recently suggested that X could become a $1 trillion company someday if it is able to accomplish all his plans, including being an "everything app."
If X reaches a $250 billion valuation, it would mark an increase of 468% for investors in Musk’s acquisition of the company.
Musk has hinted that X could go public again someday in the future.
Read Next: Musk's Unprecedented Rebrand Of Twitter To X Could Cost $100 Milion
Image: Shutterstock
© 2023 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.