The Uncertain Future of X: A Financial Analysis
As the owner of X, Elon Musk, shows his support for Presidential candidate Donald Trump, the future of X itself remains uncertain. With a potential significant loss in 2024 looming, bankruptcy could be on the horizon for the once-popular bird app.
However, all hope is not lost. Depending on the outcome of the November election, there may be a glimmer of hope for X to turn things around.
According to internal documents, X is projected to bring in $2.9 billion in total revenue for 2024, primarily driven by ad sales. Subscriptions to X Premium, which Elon had high hopes for, contribute a minimal amount to the revenue stream.
TechCrunch estimates that X currently has 1.3 million paying users, generating $176.4 million per year, a mere 6% of the total revenue. Musk’s original plan anticipated subscriptions to account for 50% of total intake, indicating a significant gap in expectations versus reality.
Data sales and the recent increase in API costs are intended to boost revenue, but these efforts may only have a marginal impact on X’s financial performance.
In comparison, Twitter generated $4.4 billion in revenue in 2022 before Elon Musk took over, predominantly through ad sales. However, under Musk’s leadership in 2023, revenue dropped to $3.4 billion, signaling a worrisome trend if current estimates hold true.
With debt service costs of $1.2 billion per year stemming from Musk’s acquisition of Twitter, X’s financial outlook seems bleak. The limited revenue may not be sufficient to cover operational costs, let alone turn a profit.
As X explores alternative revenue streams such as selling @handles and offering ad credits for X Premium, the road ahead remains challenging. Advertisers are hesitant due to Musk’s political commentary, posing a threat to X’s revenue potential.
Though the future looks uncertain, there may be a glimmer of hope in Musk’s xAI project. With a recent $6 billion funding round and potential collaboration with Tesla, X could receive a much-needed cash infusion through interconnected ventures.
The upcoming election outcome holds the key to X’s fate. A Trump re-election may open doors for increased investment and government support, while a different outcome could spell further trouble for X.
Ultimately, the financial health of X hangs in the balance, with December likely marking a crucial turning point. Regardless of the result, X’s future remains uncertain, posing a significant challenge for Musk’s ambitious project.