Article:
The financial outlook for X (formerly known as Twitter) appears increasingly dire as insider sources reveal that the social media platform is expected to end 2023 with approximately $2.5 billion in advertising revenue. This figure represents a significant slump from prior years, falling half a billion dollars short of the $3 billion that X executives had initially projected for ad sales in 2023.

According to sources speaking to Bloomberg, X experienced a decline in ad revenue over the year. While the platform had previously earned over $1 billion in ad revenue per quarter, the first three quarters of 2023 saw X generating only a little over $600 million each quarter. The situation was further exacerbated by a recent advertiser fallout stemming from antisemitic content on the platform, which was estimated to have caused a sudden $75 million loss in November.

Advertising earnings constitute a substantial portion of X's revenue, with sources indicating that it makes up around 70-75 percent of the total. With this in mind, Bloomberg estimates that X's overall earnings for 2023 will amount to approximately $3.4 billion, bolstered by subscriptions and data licensing deals.

Joe Benarroch, Head of X's business operations, addressed the recent report, emphasizing that it presents an incomplete view of the company's business. Benarroch stated that X is an evolving global business with multiple revenue streams, asserting that it is no longer comparable to its previous iteration as Twitter, both in terms of revenue and user metrics.

The fallout from an antisemitic post that Elon Musk, the owner of X, boosted on the platform continued to cause troubles. Although Musk apologized for his actions, he did not remove the controversial post and continued to antagonize advertisers, accusing some of them of trying to "kill the company." The situation led to major brands, including Disney, pausing their advertising on X. Musk targeted Disney CEO Bob Iger, criticizing Disney for advertising on Meta platforms while allegations of child exploitation were made against Facebook and Instagram.

X's recent decision to reinstate the account of Sandy Hook shooting-denier Alex Jones, as well as Musk's inflammatory statements about advertisers, has further contributed to the advertiser boycott, posing a potential long-term threat to X's viability as a platform.

While Musk has previously expressed his intention to reduce reliance on advertising and shift towards subscriptions, sources indicate that X's subscriptions have not gained as much traction as anticipated. With just over 1 million paying subscribers out of the platform's extensive user base, X's subscription revenue currently stands at less than $120 million annually.

Under Musk's leadership, X's financial growth has faced significant setbacks. Prior to Musk taking control, Twitter had earned over $5 billion in 2021, with the company's former CEO Jack Dorsey setting a goal to reach $7.5 billion in revenue by the end of 2023. Given the current estimate of $3.4 billion for 2023, it highlights the substantial decline in X's financial performance.

As X faces hesitancy from major brands to advertise on its platform, it is seeking to attract smaller brands by offering deals to increase ad investment. Generating more ad revenue is crucial not only to meet X's financial goals in 2024 but also to realize Musk's projection of reaching 1 billion monthly X users next year. The platform's strategy to attract content creators through lucrative ad revenue sharing aims to drive higher user engagement, though concerns have been raised about the impact of the ongoing boycott on creators' ability to profit from the platform.

With the uncertain financial situation and waning user trust, X is faced with an uphill battle to regain stability and build a sustainable future for the platform.