In October 2022, Elon Musk, the world’s richest man, made headlines by purchasing the microblogging site Twitter for a massive $44 billion. After rebranding it as X, the platform’s financial journey has been anything but smooth. According to investment firm Fidelity, the value of X’s shares has taken a severe hit, dropping by nearly 80% since the purchase. The company’s current valuation stands at $9.4 billion, a significant drop from its estimated worth of $30 billion at the time Musk acquired it.
Advertisers Shy Away from X, Revenue Declines
A big reason for this drastic decline in X’s value is the drop in advertising revenue. After Musk took over, concerns arose among advertisers over the platform’s content policies, leading many to pull out. A global survey revealed that 26% of advertisers plan to reduce their ad spending on the platform in the coming year, opting for safer options like Google. Despite efforts, X has struggled to retain the same level of ad engagement it once had, making it difficult for the company to maintain its revenue streams.
Active Users Grow, But Ads Still Lag Behind
Despite the financial struggles, X continues to attract users. The platform reported 570 million monthly active users during the second quarter of this year, marking a 6% increase from the previous year. However, the lack of sufficient advertising revenue has dampened any positive momentum that this growth could bring.
Musk’s gamble on transforming Twitter into X may still have a long way to go before proving itself as a wise investment.
