Tesla's "trash-talking" comes at a high cost! It is rumored that the company's advertising sales this year will decline to around $2.5 billion, falling short of internal targets.
Under the leadership of Musk, the social network X (formerly Twitter) is expected to see a significant decline in advertising revenue to around $2.5 billion in 2023, compared to previous years. Advertising sales currently account for 70% to 75% of X's total revenue. The way content moderation is handled under Musk's leadership has raised concerns among advertisers, leading to a decrease in advertising sales. The Chief Operating Officer of X stated that X is a constantly evolving new global business and is no longer relying on old Twitter metrics to measure itself. Musk has confirmed that advertising revenue has declined by approximately 50% to 60%.
Zhitong App has learned from informed sources that Elon Musk's social network X (formerly Twitter) is expected to generate approximately $2.5 billion in advertising revenue in 2023, a significant decline compared to previous years. According to insiders, X's advertising revenue for each quarter in the first three quarters of this year was slightly higher than $600 million, and a similar performance is expected for the current quarter. In contrast, the revenue for each quarter in 2022 exceeded $1 billion.
According to two informed sources, advertising sales currently account for 70% to 75% of X's total revenue. This means that the total revenue for 2023 is estimated to be around $3.4 billion, including sales from subscriptions and data licensing transactions. Previously undisclosed sales data clearly indicates that advertisers are concerned about X's content moderation under Musk's leadership, especially his posts amplifying anti-Semitism and other extremist views.
One insider stated that the initial goal of X executives was to achieve $3 billion in advertising and subscription revenue in 2023, but this figure will be far from reached. As the holiday season is not yet over, the annual figures are still changing.
Joe Benarroch, the Chief Operating Officer of X, said, "This is an incomplete view of our entire business because the information sources you rely on do not provide accurate and comprehensive details."
After Musk's acquisition in October 2022, the company stopped disclosing financial data. Benarroch described X as a "growing new global business with multiple sources of revenue. We are no longer Twitter, and we no longer measure ourselves with the old Twitter metrics, whether it's revenue or user metrics."
Most of X's sales have relied on advertising, but this business has been declining since Musk took over. Musk has confirmed a significant decrease in sales. In March of this year, he stated that advertising revenue had dropped "by about 50%," and in mid-July, he reiterated this statistic on X without specifying the timeframe. In September, Musk also confirmed a 60% decline in advertising revenue in the United States. He attributed the decline in sales to activists who encouraged marketers to stop spending on this service.
The company also earns money from its subscription service X Premium and data licensing agreements. It is estimated that the subscription business generates less than $120 million annually. In 2021, X (then Twitter) generated $572 million in revenue from data licensing agreements.
When Musk took over X, the company was not yet profitable, but in the year before Musk's acquisition, the company's revenue exceeded $5 billion. In early 2021, Twitter executives, led by then-CEO Jack Dorsey, set a public goal to achieve $7.5 billion in revenue by the end of 2023.
In contrast, Musk has cut costs and inadvertently scared off many brand-conscious marketing partners. Musk frequently makes controversial statements to his 165 million followers and has revoked several user bans for policy violations. In November, Musk expressed support for an anti-Semitic post, which led several major advertisers, including Apple (AAPL.US) and Walt Disney Company (DIS.US), to suspend their spending on the platform. Musk later apologized, but at a meeting at the end of November, he angrily criticized the advertisers boycotting the service and said that taking back their money was equivalent to extortion.
According to insiders, Musk had previously told employees and investors that he hoped subscription revenue would account for half of the company's total business. However, the paid user base for this service is only slightly over 1 million, far below Musk's initial expectations. X has been striving to reduce its reliance on major brand advertisers and has recently started attracting more small and medium-sized enterprises to join the platform. Musk expressed concerns at the DealBook conference in November that the decline in advertising revenue could lead to the company's closure.