X may miss revenue projection by $1.4 billion as Elon Musk keeps scaring advertisers away

Elon Musk’s social network, X (formerly known as Twitter), is projected to experience a substantial decline in advertising revenue for 2023, according to a Bloomberg report. Estimates suggest that it would make approximately $2.5 billion, instead of $3 billion, as anticipated earlier, In the first three quarters of the year, X generated slightly over $600 million in advertising revenue per quarter, a notable drop from the over $1 billion per quarter recorded in 2022. Advertising currently constitutes somewhere around 70 to 75 per cent of X’s total revenue, including sales from subscriptions and data licensing deals. X was expected to generate a revenue of around $3.4 billion in 2023. Of this, about $3 billion was supposed to come from advertising and subscriptions this year. However, the platform is expected to fall significantly short of that goal. The decline in advertising revenue is attributed to concerns among advertisers about X’s content moderation practices under Elon Musk, particularly his posts amplifying antisemitic and extremist views. Musk took over X in October 2022, and since then, the platform has seen a decline in ad sales. Musk has acknowledged a considerable drop in ad revenue, citing a roughly 50 per cent decrease in March and a 60 per cent decline in US ad revenue in September. He blamed the decrease on activists urging marketers to stop spending on the platform. While X also generates revenue from its subscription service, X Premium, and data licensing agreements, external estimates suggest the subscription business contributes less than $120 million annually. Musk has expressed a desire for subscription revenue to make up half of the company’s total business, but as of now, the service has just over 1 million paying subscribers, which is not even 1 per cent of X’s total userbase. This figure falls significantly short of Musk’s initial expectations Despite not being profitable when Musk took over, X, back then Twitter, had reported over $5 billion in revenue in 2021 the year before his acquisition. In 2022, Twitter had a revenue of $4.4 billion. This year, X may have a revenue of less than $3 billion, if advertisers continue to pull out. Musk has implemented cost-cutting measures but has faced challenges with brand-conscious marketing partners due to his controversial statements and policy decisions. Major advertisers, including Apple and Walt Disney, paused spending in November after Musk voiced support for an antisemitic post. Musk later apologized but, during a conference, criticised advertisers boycotting the service, stating, characterizing their actions as blackmail. Musk has expressed concerns that the decline in ad revenue could lead to the company’s failure. (With inputs from agencies)