Elon Musk’s Explosive Clash with Advertisers Raises Questions About X’s Future
In a surprising turn of events, Elon Musk’s aggressive response to advertisers leaving X (formerly Twitter) has left experts puzzled. With major companies like Disney and Apple pulling out, Musk’s profanity-laden comments and hints at potential bankruptcy indicate the severity of the situation.
X heavily relies on advertising revenue, constituting about 90% of its income. Musk acknowledged that the success of X as an advertising platform relies on big players like Disney and Apple feeling comfortable. However, with these advertisers exiting, the company’s financial stability is in jeopardy.
Walmart’s recent decision to stop advertising on X further compounds the issue. Musk’s direct targeting of CEOs, such as Disney’s Bob Iger, adds an extra layer of complication, making potential collaborators hesitant.
The question now arises: Could X really go bankrupt? Musk, who acquired the company for $44 billion last year, acknowledges the danger lies in a sustained advertiser boycott. If advertisers don’t return, X may struggle to survive.
Musk faces the challenge of replacing the significant advertising revenue, which constituted $4 billion in 2022 but is estimated to drop to $1.9 billion this year. The company’s substantial expenses, including staffing costs and servicing loans, add to the financial strain.
While bankruptcy remains a last resort, Musk has options. He could inject more personal funds, renegotiate loan terms, or explore new revenue streams. Despite Musk’s recent endeavors, like the audio and video calls service, and plans for X to become an “everything app,” immediate solutions to the advertising revenue gap are elusive.
The situation poses risks not only to X’s financial health but also to Musk’s business reputation. The article suggests that finding a new revenue stream is crucial for X’s survival. While Musk has ambitious plans, the short-term challenge remains plugging the hole left by departing advertisers. (Source : BBC)
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