Virendra Pandit
New Delhi: Global social media giants have lost their wealth heavily this year and their founders’ net worth has taken a nosedive on the bourses.
Elon Musk, the world’s wealthiest man, lost over USD 66 billion this year. And so did Facebook founder Mark Zuckerberg, who took a hit of over USD 100 billion.
Hours before finalizing his USD 44 billion acquisition of Twitter Inc. this week, Musk, 51, had said he bought the microblogging platform to help humanity, not to make more money. He took an instant hit of USD 10 billion to his net worth, the media reported on Saturday.
The Tesla Motors CEO had spent at least USD 25 billion to follow through on his agreement from April to buy Twitter for USD 54.20 a share.
But six months after Musk announced the acquisition, his offer became very expensive. Shares of social media companies have since 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 percent. The Bloomberg wealth index factors in a similar drop in the value of Twitter, and, thus, Musk’s stake.
Other social networking peers fared even worse. Shares of Meta Platforms Inc., which owns the Facebook and Instagram networks, are down 53 percent since Musk made his offer for Twitter in April, slashing Chief Executive Officer Mark Zuckerberg’s fortune by over USD 100 billion from its peak. Snap Inc. has sunk 70 percent over the period, erasing the wealth of its co-founders.
Likewise, Twitter co-founders Jack Dorsey and Prince Alwaleed Bin Talal al Saud, who supported the takeover of the microblogging platform, and are thought to have remained investors in the company, have seen their wealth estimates drop USD 380 million and USD 640 million, respectively.
But it was a great deal for Twitter investors who are cashing out. Not only did they get a 20 percent premium when Musk made his take-private offer, but they also avoided the crash in stock prices that hit rival social media giants.
It’s also a big windfall for several outgoing Twitter executives set to share in severance and payouts worth roughly USD 100 million. About half of it will go to Indian-origin Parag Agrawal, the former CEO.
Musk spent months trying to wriggle out of the Twitter bid. In July, he announced the termination of the deal because they had misled him about the prevalence of bots on the network. After an angry Twitter sued to force him to complete the deal, the parties went to court. Musk ultimately agreed to proceed at the original offer price by October 28, the deadline set by a court.
With the USD10 billion hit to Musk’s fortune, his total losses this year amount to over USD 66 billion.
Shares of Tesla Inc., his most valuable asset, are down 35 percent this year, partially on fears he’d sell shares in the electric-vehicle maker to fund his Twitter purchase. Musk used all his available liquid assets to complete the Twitter purchase, and his estimated liabilities increased by USD 4.6 billion, according to the media reports.