Elon Musk's X 2023: Projected Decline in Advertising Revenue to $2.5 Billion - An Analysis

Aquib Nawab


Image Credit: Marathi Finance

1. Background

Elon Musk's X, formerly known as Twitter, is expected to see a significant decline in advertising revenue in 2023, according to insider information reported by Bloomberg.

Credits: Seattle Times

Credits: Canva

2. Advertising Revenue Overview

Elon Musk's X is projected to earn approximately $2.5 billion in advertising revenue, a stark contrast to its previous performance. This marks a considerable decline in ad sales since Musk's takeover.

3. X's Advertising Revenue Trend

In each of the first three quarters of 2023, X has generated just over $600 million in advertising revenue, which represents a notable drop compared to the over $1 billion per quarter it earned in 2022.

Credits: Marca

Credits: Canva

4. Revenue Composition

A significant portion of X's total revenue, between 70% and 75%, is derived from advertising sales. This implies that the projected 2023 sales, including subscriptions and data licensing deals, amount to approximately $3.4 billion.

5. Content Moderation Concerns

Advertisers have expressed concerns about X's handling of content moderation under Elon Musk's ownership, particularly in relation to posts that amplify antisemitic and extremist views.

Credits: Canva

Credits: Canva

6. Revenue Targets vs. Reality

X's initial target for 2023 was $3 billion in revenue from advertising and subscriptions, but it is expected to fall considerably short of that goal. The final annual figure is still uncertain, pending the holiday quarter results.

7. X's Response

Joe Benarroch, head of business operations for X, has emphasized that the company is evolving and no longer measures itself by old Twitter metrics, presenting an incomplete view of its entire business.

Credits: Ragan

Credits: Canva

8. Decline in Ad Revenue

Elon Musk has acknowledged a significant drop in ad revenue, citing a decline of approximately 50% or even 60% at various points in time. He has attributed this decline to activism urging marketers to halt their spending on the platform.

9. Revenue Streams

X's revenue streams extend to X Premium subscriptions and data licensing deals. Subscriptions estimated under $120M annually, while in 2021, X (formerly Twitter) earned $572M from data licensing.

Credits: The Guardian

10. Musk's Impact

Elon Musk's cost-cutting and controversial statements had a major impact. His support for an antisemitic post led to Apple Inc. and Walt Disney Co. pausing ads. Musk aims to make subscriptions half of the business.

Credits: Streetfins

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