Empire Codex

Contraction of value

Here’s what we have for you today:

• Lagging behind

• Post-traumatic

• The untouchable

Fidelity’s software write-down

Read it: Fidelity valued its holdings in Reddit at $15.4 million as of late May, 2023. This suggests a $5.5 billion valuation for Reddit at the moment. A total drop of 45.4% since its investment in August, 2021.

The cut: Fidelity’s value of its Discord’s holding is currently $1.7 million, in total down 47% since the $3.3 million initial investment.

Previously: Reddit was valued at $10 billion in August, 2021. Whereas Discord was valued at $15 billion in September, 2021.

Post-buyout of Twitter

By design: Fidelity is legally required to disclose how much its stake in X Holdings is worth among other holdings.

Financial evaluation: According to Fidelity’s Contrafund filings, as of the end of May 2023, after taking three separate write-downs, Contrafund valued its Twitter stake at $17,826,565. That’s approximately two-thirds below its cost of $53,469,000 for its X Holdings stake when the buyout took place in October 2022.

Slippery slope: Fidelity fund investors have taken a hit of about $210 million on the funds’ initial $316 million X Holdings stake. As for all the co-investors, in total had a reported initial stake of $7.14 billion, and their total paper loss is about $4.75 billion.

Private credit with intangible assets

Pouring rain: Private credit assets under management in media grew to nearly $80 billion in mid-2022 from some $31 billion in 2018, according to Preqin.

The viewpoint: As of 2023 ratings agency Moody‘s suggested defaults among borrowers in private credit will rise.

Fascinating: Lenders might find themselves in a wary situation as they navigate defaults in an industry where the product isn’t always tangible.

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