ARK Invest, led by Cathie Wood, has reduced its stake in Twitter 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 currently 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. 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”.
In the ARK Innovation ETF ARKK fund, Tesla, Inc. TSLA continues to be the leading investment, constituting 11.3% of the portfolio, while Coinbase Inc. COIN comes in second with a 9.1% allocation.
Other asset managers, including Fidelity Investments, have also 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.
Meanwhile, ARK has been actively investing in other social media giants. Recently, it purchased a substantial number of shares in Meta Platforms. This move suggests that ARK is diversifying its portfolio to include other promising players in the social media landscape.
This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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