Fidelity raises value of X shares by 32% after Musk offers compensation in xAI

Zhitong Finance App noticed that Fidelity raised the value of Elon Musk's X stock by 32.37% in October, which may be due to Musk allocating shares of XAI to investors who helped him acquire X.

Despite the price increase, Fidelity's valuation of the platform (formerly Twitter) is still 72% lower than Musk's $44 billion acquisition price in 2022.

The report added that Fidelity, as a shareholder, may not have any insider information about X's financial performance.

Fidelity invested $6 billion in XAI's $6 billion B round earlier this year. The investment firm held XAI stock at cost for several months until it was raised by about 70% in October.

Fidelity's report is lagged by a month, meaning the new valuation does not reflect Trump's re-election or Musk's prominent role in the incoming government.

Musk acquired X (formerly Twitter) for $44 billion in October 2022 and completed its privatization. Musk's offer was nearly 40% higher than X's market value at the time he proposed the acquisition. X's value has plummeted since Musk took over, with one investment firm estimating its valuation at $9.4 billion in September, down nearly 80% from the acquisition price.

Some investors, including Fidelity, Larry Ellison, the co-founder of Oracle, Prince Alwaleed, the "Middle East Warren Buffett," Jack Dorsey, the founder of Twitter, and venture capital firms Redwood and Andreessen Horowitz, contributed a total of $7.1 billion in Musk's acquisition of X. The rest of the money came from bank loans and Musk's own wealth.

It is known that Musk offered 25% of XAI to these investors.