According to estimates from the Washington Post, the eight largest investors who took part in the acquisition of the social network lost $5 billion.
An operation that turns into a nightmare for investors. To conclude the social network buyout in October 2022 for the modest sum of 44 billion dollars, Elon Musk had to borrow a large amount from banks. But the billionaire also received support from several major investors.
According to an official list relayed by the Washington Postmore than 100 investors have invested alongside Elon Musk. Among them, the former founder of Twitter Jack Dorsey, the hip-hop star Sean Combs, or the Saudi prince Alwaleed bin Talal. With the hope of seeing their investment grow over the years.
Binance, Jack Dorsey and a Saudi Prince
Two years later, the results are far from being there. The company’s value has collapsed under the leadership of Elon Musk. The social network has lost more than half of its value according to American media.
A drop that is reflected among investors. The asset manager Fidelity, which invested 316 million euros in the buyout, estimates that the value of its stake has fallen by almost 72%, to 88 million dollars.
The Washington Post applied the cut to the eight largest initial investors who were reported to the US Securities and Exchange Commission (SEC). According to these estimates, the valuation of all of these holdings would have fallen by more than $5 billion.
In detail, the stake of Prince Alwaleed Bin Talal Al Saud, the largest investor after Musk, would have fallen by $1.4 billion. Jack Dorsey and Larry Ellison, co-founder and chairman of the board of Oracle, would have seen the valuation of their respective billion-dollar investments fall by $720 million. For its part, the valuation of Binance’s stake fell by $360 million. Finally, the Qatar Investment Authority would accuse a drop in the value of its stake of $270 million.
But the most emblematic case remains that of Elon Musk. The business leader invested a total of 33.5 billion dollars. To do this, he sold Tesla shares and drew on his personal fortune. The value of what he holds in the social network is now estimated at 9.38 billion dollars. In other words, a loss of 24.12 billion dollars.
The worst banking transaction since 2008
For their part, the banks, which lent Elon Musk $13 billion to buy the social network, are hardly in a better position. Still according to the Washington Postbanking establishments would have carried out the worst banking operation since the 2009 crisis.
This is not surprising since the company’s financial situation has continued to deteriorate since Elon Musk bought the platform. The billionaire’s management of the social network has flee from many advertiserslike Coca-Cola or Apple, the primary source of income before the takeover.
The social network’s revenues have therefore melted away. According to the New York Timeswhich had access to internal documents, the social network only made $114 million in revenue in the United States in the second quarter of 2024. A drop of 25% compared to the first and 53% compared to the same period last year.
Since then, Elon Musk has tried to compensate for these declines by diversifying his sales by offering paid subscriptions. Without much success.
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