ARK Invest, led by Cathie Wood, has reportedly reduced the valuation of its Twitter stake by 47% since the company was taken private by Elon Musk last year. Despite the write-down, Wood remains optimistic about Twitter’s long-term prospects.
Twitter, now a private entity, is grappling with a substantial debt burden and a significant decline in advertising revenue following Musk’s $44-billion leveraged buyout, the Wall Street Journal reported Monday.
The company’s advertising revenue has plummeted by approximately 50% and it is operating with negative cash flow. Adding to the company’s challenges is the emergence of Threads, a new microblogging app launched by Meta Platforms Inc. (NASDAQ: META) as a direct competitor.
Despite these challenges, Wood maintains a bullish stance on Twitter, citing the potential of Musk’s vision of transforming Twitter into an “everything app,” she told the WSJ.
In the ARK Innovation ETF (NASDAQ: ARKK) fund, Tesla, Inc. (NASDAQ: TSLA) continues to be the leading investment, constituting 11.3% of the portfolio, while Coinbase Inc. (NASDAQ: COIN) comes in second with a 9.1% allocation.
Fidelity Investments, along with other prominent asset managers, have dramatically reduced the value of their holdings in Twitter. As disclosed in April, Fidelity’s evaluation of Twitter’s worth was a mere one-third of the sum that Musk spent to acquire it.
Meanwhile, ARK has been actively investing in other social media giants. ARK purchased a substantial number of shares in Meta Platforms, as Zenger News reported last month. This move suggests that ARK is diversifying its portfolio to include other promising players in the social media landscape.
Produced in association with Benzinga
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