In October 2022, Elon Musk completed his $44 billion acquisition of Twitter and gave it a bold new name, X. However, as Bloomberg’s recent regulatory filings show, X has faced major financial challenges since Musk took over.
X generated $1.48 billion in revenue in the first half of 2023, which sounds impressive until you realize that it is a nearly 40% decrease from the same period in 2022. Furthermore, X reported a significant loss of $456 million in the first quarter of 2023. Clearly, the company is struggling to keep its advertising budget flowing.
When Twitter first launched, advertising accounted for 90% of the platform’s revenue. However, Musk’s provocative comments and actions have strained relationships with many advertisers.
Big names like Disney, IBM, Apple, and Lionsgate pulled their advertisements after Musk posted content that was widely condemned as antisemitic. To make matters worse, reports emerged that some ads were appearing alongside white supremacist and predujiced content, prompting even more advertisers to cut ties.
In light of these challenges, Musk is shifting X’s focus to financial services, leveraging his experience with PayPal. The new financial wing of X, X Payments, aims to function similarly to PayPal or Venmo. The company has applied for money transmitter licenses in 11 states, with plans to provide peer-to-peer payments, purchases, and even money storage within user accounts.
Musk envisions X as a place where users can manage their entire financial lives, potentially including high-yield savings accounts to encourage users to keep their funds on the platform. Despite Musk’s known interest in cryptocurrency, X Payments has no current plans to handle virtual currencies but instead sticking to more traditional financial services.
To compensate for the decline in advertising revenue, X has launched several subscription-based services including the X Premium subscription plan and a service for content creators. So far, these have not been enough to close the revenue gap. The hope is that X Payments will increase user engagement and participation resulting in new revenue streams.
Prior to Musk’s takeover, there was a payment business that operated as a separate subsidiary with its own board and management team. The platform worked with well-known payment processors such as Stripe and Adyen, as well as banks like Citibank. However, it remains unclear whether these collaborations will extend to include X Payments.
See also – Elon Musk’s X Demands Laid-Off Employees Return Payments; Here’s Why
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