In the hours before finalising his $44 billion acquisition of Twitter, Elon Musk said he bought the social media platform to help humanity, not to make more money.
By finalising the deal, the world’s richest person, who now calls himself Chief Twit, took a $10bn hit to his net worth, according to calculations by the Bloomberg Billionaires Index.
Mr Musk, 51, spent at least $25bn to follow through on his agreement from April to buy Twitter for $54.20 a share, assuming he kept the external investors who’d committed $7.1bn to the deal.
But six months after Mr Musk announced he would buy the company, his offer looks very expensive.
Shares of social media companies have crashed as economic uncertainty and interest rate increases curb market speculation and advertiser spending.
The Solactive Social Media Index, which tracks the performance of publicly traded social media companies, is down almost 40 per cent.
The Bloomberg wealth index factors in a similar drop in the value of Twitter, and, thus, Mr Musk’s stake.
Peers have fared worse.
Shares of Meta Platforms, owner of the Facebook and Instagram networks, are down 53 per cent since Mr Musk made his offer for Twitter in April, slashing chief executive Mark Zuckerberg’s fortune by more than $100bn from its peak.
Snap has lost 70 per cent over the period, erasing the wealth of its co-founders.
Mr Musk is not the only Twitter investor taking a hit. Company co-founder Jack Dorsey and Prince Alwaleed bin Talal supported the takeover and are thought to have remained investors in the company. Their wealth estimates dropped $380 million and $640m, respectively.
For Twitter investors who are cashing out, Mr Musk’s deal is a huge win.
Not only did they get a 20 per cent premium when Mr Musk made his take-private offer, they also avoided the crash in stock prices that hit rival social media companies.
It is also a big windfall for several outgoing Twitter executives set to share in severance and payouts worth roughly $100m. About half will go to Parag Agrawal, the former chief executive.
Mr Musk spent several months trying to undo the Twitter bid. In July, he said he was terminating the deal because he had been misled about the prevalence of bots on the network.
After Twitter sued to force him to complete the deal, the parties went to court. Mr Musk ultimately agreed to proceed at the original offer price.
The $10bn hit to Mr Musk’s fortune brings his total losses this year to $66bn, according to the Bloomberg wealth index.
