Cathie Wood’s ARK Investment Management has written down its stake in Twitter by 47% since Elon Musk took the social-media company private last year, Wood said in an interview.
“We take fair valuation very seriously and absolutely have had to write that [Twitter] down,” Wood said Friday. “The write-down is not representative of our fundamental outlook and belief in the long-term return on investment we believe that it will have for our shareholders.”
Wood is still bullish on Twitter’s long-term outlook. She said her fund updates its internal valuations of private companies frequently.
“I would love to get more stock at these price levels actually, but no one wants to let any go. So that tells you something,” she added.
ARK owns a small stake in Twitter through its venture fund, which is open to the public and includes public-market and private investments.
Twitter is dealing with a heavy debt load and a steep drop in advertising following Musk’s $44 billion leveraged buyout. Advertising revenue is down roughly 50% and the company has negative cash flow, Musk said in a tweet Saturday.
The company also faces a threat from the new microblogging app Threads, which was launched by Meta Platforms this month as a direct competitor to Twitter. Twitter has alleged that Meta might have stolen intellectual property, which Meta denied. Threads, which is linked to Instagram, has signed up more than 100 million users.
“We think they can coexist,” Wood said of Threads and Instagram. “I think Threads has lit the competitive fire or taken it up a notch and it will be good for Twitter. We also think that longer term, Elon and team are very serious that they’re going to turn this into an everything app.”
Musk has said that buying Twitter will help him create “an everything app” that could marry information with entertainment and grow to over a billion users in five to 10 years if successful.
Other assets managers including Fidelity Investments have significantly written down their Twitter investments. Fidelity valued Twitter at one-third of what Musk paid for it as of April 28, according to a monthly disclosure.
Write to Jack Pitcher at [email protected]
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