Elon Musk is embroiled in a new problem at Twitter, aka X, which seems inescapable. Musk has been facing issues at the company since he acquired it in 2022 for $44 billion. However, after the acquisition, advertisers started to leave the platform as the activists’ lobbied against it. This led to heavy financial repercussions as it heavily depended on advertising revenue.
While Elon Musk is trying to execute policies to compensate for advertising revenue by creating alternative streams of revenue, he has been getting flak for several controversies. Recently, he backed a conspiracy theory about the “Great Replacement” of the Jews. His attempt to peddle anti-Semitism has cost the microblogging site. Many advertisers fled from the platform after his anti-Semitism. Reducing advertising revenue can become the major reason for X’s bankruptcy.
Elon Musk-Owned X Finds It Difficult To Stay Afloat If Advertisers’ Exodus Continue
Recently, during The New York Times’ DealBook Summit, Elon Musk targeted advertisers by telling them to “f**k themselves.” He accused The Washington Post and Disney of blackmailing with advertising.
This expletive-laden statement came after many advertisers like Apple, IBM, Disney, and others stopped advertising on X after the Media Matters for America report. As per the report, X is advertising their products next to pro-Nazi content.
Now, the BBC has released a report about how X can go bankrupt with the plummeting advertising revenue. As per the report, around 90% of revenue on X came from advertising in 2022.
In an interview with the same outlet, Elon Musk admitted that his subscription plan to replace advertising revenue is not viable. He said, “If you have a million people that are subscribed for, let’s say, $100 a year-ish, that’s $100m. That’s a fairly small revenue stream relative to advertising.”
Jasmine Enberg, an analyst at Insider Intelligence, said that if X collapses, it will not be because of advertisers, but Elon Musk reiterated, “It doesn’t take a social media expert to understand and to know that publicly and personally attacking advertisers and companies that pay X’s bills is not going to be good for business.”
Her organization estimated that the advertising revenue from X dropped from $4 billion in 2022 to $1.9 billion in 2023.
How Can The Billionaire Save The Company From Bankruptcy?
When Elon Musk ventured out to buy Twitter, aka X, he funded the acquisition by taking loans. The loan that he took was $13 billion. As per Reuters, X has to pay $1.3 billion in interest every year.
The company has to also pay bills to the employees. Recently, many employees, both at the senior and junior levels, submitted their resignations after the advertisers’ debacle. So, the report states that if X fails to do either of the two, it can go bankrupt.
So, what is the best way for Elon Musk to prevent X from going bankrupt? It seems Elon has already started working on it. In October 2022, he assured that buying Twitter “is an accelerant to creating X, the everything app.”
He wanted to replicate what WeChat did in China. The billionaire wants to create a payment service, a taxi service, shopping, etc., on X. From the payments business alone, it is supposed to bring $15 million. So, with other services, Musk can easily increase the revenue on the platform, but after his recent remarks, it will be difficult to bring advertisers on board.
You Might Also Like To Read: Bill Gates And Elon Musk To Pay A Hefty Amount For Donald Trump’s Mar-a-Lago