X (formerly known as Twitter) will not be able to sustain its operations without advertisements. And Elon Musk knows this.
X, the social media platform formerly known as Twitter, is reportedly scrambling to get back much-needed advertisement revenue, a crucial lifeline for the site. Tesla and SpaceX’s CEO Elon Musk purchased Twitter in late 2022, turning the once-great social media site into a privately owned company.
Musk bought the company for $44 billion, taking almost all the funds from his share pool in Tesla. Elon Musk is the world’s second-richest person with a net worth of $214 billion, made almost entirely by Tesla shares.
Since then, Twitter’s (now X) value dropped to the ground, although any precise analysis has been impossible since the company became private. According to data acquired by Axios, Twitter’s value plummeted by 71% in just one year. As of November 2023, the company was reportedly worth $12.5 billion.
In November, Twitter’s value was additionally cut by roughly 10% after Musk’s statement against advertisers. At the time, large companies including Sony, Paramount, Disney, and Apple were withdrawing their ads from X in fear of the soaring antisemitic and racist posts on the platform.
Musk, a self-professed “free speech guru”, openly told advertisers to “go f***” themselves if they wanted to “blackmail [him] with money”.
Stopping the flood
In recent days, Elon Musk posted several statements on his X profile, urging his 177 million followers to bring more people on the platform.
According to an analysis by Sensor Tower, the number of daily active users on X declined drastically last year to about 174 million in February, a 15% annual fall. By comparison, daily users on Instagram, Facebook, and TikTok grew by 5.3%, 1.5%, and 0.5% respectively in the same period.
Moreover, 75 out of the US’s 100 largest advertisers have now ceased their activities with X. The company is losing hundreds of millions of dollars every quarter, with a $456 million loss in Q1 2023 as reported by Bloomberg.
“This decline in X mobile app active users may have been driven by user frustration over flagrant content, general platform technical issues, and the growing threat of short-form video platforms,” Sensor Tower analyst Abe Yousef said.
Musk will attend the Cannes Lions Festival looking for advertisers. He has since retracted November’s statement, arguing that “Advertisers have a right to appear next to content that they find compatible with their brands.”
“What is not cool is insisting that there can be no content that they disagree with on the platform,” he added.
