Despite the claims of surging popularity by X’s owner and CEO, the transition to X has not been a financial success for the platform. Internal documents obtained by The New York Times revealed a 25 percent decline in revenue in the United States during the second quarter of this year, translating to $114 million. This marks a 53 percent drop from the previous year, raising concerns about the sustainability of Elon Musk’s social media experiment.
In 2022, the year before Musk took over the app, Twitter generated $4.4 billion in revenue mainly through advertising. However, in 2023, Musk’s first year at X, revenue decreased to around $3.4 billion, highlighting a significant drop in ad revenue. While Musk managed to reduce staff costs by 80%, the acquisition of the app for $44 billion resulted in a substantial debt burden. X’s profit margins have improved, but the added $1.2 billion in annual costs for debt servicing has put the platform in a precarious financial position.
Historically, X has relied on U.S. users for revenue, with around 50% of its income coming from the country. Assuming the same trend continues, X’s total revenue for the second quarter of 2024 stands at approximately $230 million. With a 25% decline from the first quarter, the platform might have generated around $287 million in total revenue in Q1. This brings the total for the first half of 2024 to $517 million. While X Premium has around a million subscribers, adding roughly $48 million in revenue for the first six months, the platform is projected to earn around $600 million in the first half of the year and a potential $1.2 billion for the year.
The goal of reaching $190 million in U.S. revenue for the third quarter seems ambitious, especially with declining figures and a struggle to recover even 50% of the 2023 income. The financial outlook raises questions about the pathway to profitability for X under Musk’s leadership. It remains uncertain whether X can attract advertisers, increase subscription uptake, or sustain its financial viability in the long run.
Elon Musk has hinted at potential cross-investments into X as part of the broader xAI project. However, while securing additional funding may provide a short-term solution, it does not guarantee the sustainable growth of the app. Musk’s commitment to free speech, at the cost of financial losses, poses a significant challenge when faced with the need to attract advertisers and increase revenue streams.
The financial struggles of X under Elon Musk’s leadership signal a challenging road ahead for the platform. While innovative solutions and strategic investments may offer temporary relief, the long-term sustainability of the app remains uncertain. Convincing advertisers, increasing subscription revenue, and finding new ways to generate income will be essential for X to overcome its financial hurdles and achieve profitability in the future.
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