X, formerly known as Twitter, once considered the Wild West of social media, has tread a very shaky path over the last five years, from its unprofitable advertising business, and spread of misinformation during the US presidential elections, to its takeover, mass layoffs, and road to destruction in the hands of Tesla and Space X billionaire Elon Musk. With each of these major events causing a lot of uncertainty among its investors and advertisers, Twitter is often considered a last-ditch effort for a majority of advertisers looking to promote their products and services to its users.
In 2021, before the Elon Musk takeover, they had 5 billion dollars in revenue and a net loss of 200 million. And unless Elon Musk has a serious plan to turn things around, it’s only going to go downhill from here. Traditionally, Twitter would enter a new fiscal year with approximately a billion dollars worth of advertising contracts already secured. This year, things took a wild turn as Musk, amidst his takeover negotiations, made advertisers very jittery. The absence of a concrete plan to safeguard the brand’s reputation and Musk’s dismissive attitude led to a significant drop in pre-sold advertising contracts. This alone translates to a billion dollars lost out of a $5 billion revenue pie. Advertisers further withdrew from purchasing spot advertising due to the perceived reputational risks. Their concerns, voiced both privately and publicly, centered on Twitter’s ability to protect their brand image. Musk’s response, however, was far from reassuring; he brushed off their concerns and even went so far as to block the COO of one of the world’s largest advertisers when he dared to question Twitter’s reputation safeguards.
So we can honestly say that it’s quite an uphill battle from here on out. In September 2023, Elon Musk posted a tweet saying “Our US advertising revenue is still down 60%, primarily due to pressure on advertisers by @ADL (that’s what advertisers tell us), so they almost succeeded in killing X/Twitter!”. This tweet comes on the heels of Elon Musk opening the floodgates of Gotham City and unbanning antisemitic users, laying off 80% of his moderation team, and changing his business model to prioritize blue-check users.
With Musk himself stating that 60% of ad revenue is down, it looks clear to us that advertisers are steering clear of Twitter until Elon Musk can pull up his bootstraps and restore Twitter to its former glory. The options, at this point, seem binary: Twitter goes insolvent in 2023, or Musk reaches deep into his coffers to bail it out with billions more. The bottom line? Twitter’s survival hinges on Musk’s willingness to dig deep and ride out the financial storm. Whether he’ll make that commitment or Twitter becomes another footnote in the annals of social media history remains to be seen.
