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Elon Musk, in a recent outburst against advertisers, said, “Go [expletive] yourself,” X is seeing a mass exodus of advertisers after Musk’s anti-semantic posts. Big names like Disney and Apple have dumped X as their advertising platforms.
Musk doesn’t seem to be amused by this mass anti-X movement. He pinned the potential bankruptcy of X on advertisers, saying that advertisers could kill the company.
The whole world will know those advertisers killed the company, and we will document it in great detail.Elon Musk
Earlier in April, Musk had said that the advertisers would soon be back on the platform. However, things haven’t panned out as promised. X seems to have lost more than 50% of its advertising revenue.
When Musk took over Twitter, 90% of its revenue came from advertising. However, now that it is a private company and doesn’t publish quarterly reports, it is hard to comment on its ad revenues.
Linda Yaccarino, X’s CEO, reposting Musk’s latest interview with Dealbook.
X is enabling an information independence that’s uncomfortable for some people. We’re a platform that allows people to make their own decisions.Linda Yaccarino
In the middle of the whole controversy is Musk’s anti-semantic tweet, for which he later apologized. Musk said sorry for the tweet, admitting that it is the dumbest thing he has ever said. However, that had no effect on the advertisers, who seemed to have made up their minds.
Putting oil to the fire is Media Matters, a non-profit research organization. It published a report accusing X of showing pro-Nazi content side-by-side with popular advertisers. This drew massive flak, with more advertisers leaving the platform.
X has since filed a lawsuit at the US District Court for the Northern District of Texas, accusing Media Matters of deliberately manipulating data to push advertisers away from X.
Can X Go Bankrupt?
Experts expect X’s advertising revenue to drop to $1.9bn this year from $4 in 2022. Elon Musk seems to understand that subscription revenue cannot fill this massive hole.
Talking about expenses, X has two major bills — staff payments and interest servicing. The company is already down to the T when it comes to employee costs. Several layoffs have meant that the company is already operating at the lowest capacity possible.
Musk had taken out $13bn in loans while buying X, which translates to an annual interest of $1.2bn. Thus, in simple math terms, if X isn’t able to satisfy its obligations with whatever advertising money it is earning, it can go bankrupt.
Musk does have the option to renegotiate with bankers for more lenient interest terms. If that doesn’t work out, he might have to put his own money into the business. However, if none of the two options are worked out, X might be at the end of its long rope.
Musk and Yaccarino have an uphill battle in bringing advertisers back to the platform. Without this, the company can fall sooner or later.
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