Since Elon Musk acquired Twitter, which has been rebranded as X, the tech billionaire has made some questionable decisions and actions. The company's valuation has only gone down since, and analysts believe that with the recent controversy, everything will just go further downhill.
X Was Already in a Bad Position
Even before the advertisers' exodus, X struggled to keep the company profitable. Advertisers have already exited before and some of the remaining ones have followed suit after Musk agreed to an antisemitic conspiracy theory.
To put things into perspective about just how important ad sales are, the social media company gets about 90% of its overall revenue from advertisers. That means that the more businesses exit, the more the company will suffer huge financial losses.
Back in October, which was before Musk's post wreaked havoc on his own company, X's ad business was already expected to see a 54.4% year-over-year decline in global ad spending, as per Tech Crunch. With the recent exodus, the numbers will likely get worse.
X owner Elon Musk himself admitted that in September, the US ad revenue decreased by 60%. Insider Intelligence Jasmine Enberg says that major brands exiting X's advertising might encourage others to do the same.
Enberg expressed that while advertisers are used to the risks of running ads with user-published content, the situation is different as it's the owner himself who has been "amplifying misinformation and hate speech, and emboldening conspiracy theorists."
Despite advertisers leaving the platform, X continues to be at the forefront of news among all social media sites, which has been proven by the recent mess in OpenAI as its own CEO was fired. However, that does not guarantee the company's survival in all this.
After all is said and done, advertisers are still the main source of revenue for the company, even after all of Musk's efforts to squeeze money out of its users with the verification system based on subscriptions, and the new API pricing.
X's user base numbers are not looking too good either. Analysts believe that the platform's monthly active users will drop by 4.1% by the end of 2024, with US users seeing an 8.1% decline as well by the end of next year.
Company Giants That Have Left X
As if last year's advertiser exits weren't bad enough, this year has also seen several company giants bid adieu to what once was Twitter. Apple, Disney, IBM, and Warner Bros. Discovery were among those who left and criticized Musk's agreement with the antisemitic conspiracy theory.
While most have stayed silent on the matter, IBM expressed its disappointment as some of its ads appeared near pro-Nazi content. The company stated that it has "zero tolerance for hate speech and discrimination," as reported by CNN.
As a result, the company has immediately suspended all advertising on X as they investigate the "entirely unacceptable situation." If the situation escalates, the company could lose more advertisers. By the end of it all, X's current valuation of $19 billion might drop even further.
