Elon Musk's social media platform, X, formerly known as Twitter, is anticipated to see a significant downturn in advertising revenue, with projections for 2023 hovering around $2.5 billion.
This marks a substantial decrease from the previous year when X raked in over $1 billion per quarter in 2022. Throughout the first three quarters of 2023, X recorded just over $600 million in advertising revenue each, with expectations of a similar performance in the ongoing period.
Ad sales constitute 70% to 75% of X's total revenue, suggesting 2023 sales of approximately $3.4 billion, encompassing revenue from subscriptions and data licensing deals, according to Bloomberg.
Initial revenue targets set by X executives for 2023, aiming at $3 billion from advertising and subscriptions, appear unlikely to be met. This reveals advertiser concerns about content moderation under Elon Musk's ownership, especially posts amplifying antisemitic and extremist views.
C.E.O. of Tesla, Chief Engineer of SpaceX, and C.T.O. of X Elon Musk speaks during the New York Times annual DealBook summit on November 29, 2023, in New York City.
Addressing Revenue Challenges
Joe Benarroch, X's head of business operations, stressed the hindrance to a comprehensive understanding of the business due to incomplete and inaccurate information from sources. X discontinued the public reporting of financial data post-Musk's takeover, emphasizing its transformation into a new global business with diverse revenue streams distinct from old Twitter metrics.
Elon Musk has acknowledged the decline in ad revenue, citing a roughly 50% decrease in March and a subsequent 60% drop in US ad revenue in September. Activists advocating for a spending halt on the service were linked to this decline. X also generates income from its subscription service, X Premium, and data licensing agreements, with estimates indicating a subscription business generates less than $120 million annually.
Despite not being profitable when Elon Musk assumed control, X reported over $5 billion in revenue the year before his acquisition. The tech titan's cost-cutting measures have inadvertently unsettled brand-conscious marketing partners. Musk's controversial statements on X (formerly Twitter), including support for an antisemitic post, led major advertisers like Apple Inc. and Walt Disney Co. to suspend spending.
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Elon Musk Willing To Face Imprisonment Amid Censorship Threat
Elon Musk's goal of having subscription revenue comprise half of the total business faces challenges, with X having just over 1 million paying subscribers. The platform actively seeks diversification by targeting small- and medium-sized businesses. Musk expressed concerns during the DealBook conference in November that the decline in ad revenue could potentially lead to the company's failure.
In a separate development reported by Business Insider, data from IT security firm Cloudflare reveals that Starlink usage in 2023 has nearly tripled, indicating a significant surge in global internet traffic. The high-speed web access service, which uses SpaceX's satellite network to power it, has expanded its reach to numerous new nations despite being involved in various Elon Musk controversies.
Meanwhile, Elon Musk has expressed his readiness to face imprisonment if a US government agency, such as the FBI, attempts to censor content on X.
"If I think a government agency is breaking the law in their demands on the platform, I would be prepared to go to prison personally," the tech mogul remarked, as quoted by Fortune.
This statement was made during a Spaces discussion with Alex Jones, the Sandy Hook conspiracy theorist, whose X account Musk reinstated over the weekend. Elon Musk, who previously opposed Jones' return, conducted a poll to decide and ultimately changed his stance.
Alex Jones had been convicted of promoting a false flag theory about a shooting, resulting in a $1.4 billion damages order.
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