Advertiser Exodus Threatens X with $75 Million Revenue Loss

InfoStride News reported that Elon Musk’s social media company, X, faces a potential loss of up to $75 million in advertising revenue by the end of the year. This financial setback comes as numerous major brands, including Walt Disney and Warner Bros Discovery, have paused their marketing campaigns on the platform in response to Musk endorsing an antisemitic post. The controversial social media activity prompted a suspension of advertisements by these companies, as highlighted by a media agency.

In response to the backlash, X has taken legal action against the media watchdog group Media Matters, alleging defamation. The lawsuit is connected to a report that claimed ads for major brands, such as Apple and Oracle, appeared alongside posts promoting Adolf Hitler and the Nazi party. The situation has further escalated as internal documents, examined by the New York Times, revealed that over 200 ad units from companies like Airbnb, Amazon, Coca-Cola, and Microsoft are either paused or under consideration for suspension on the embattled social network.

As a result of these challenges, X disclosed that $11 million in revenue is currently at risk, with the actual amount subject to fluctuations as certain advertisers reconsider their association with the platform or adjust their spending, according to the report.

The troubles for X started escalating since Musk’s acquisition of the platform in October 2022. The platform has witnessed an exodus of advertisers due to perceived issues with content moderation, leading to a notable increase in hate speech, as highlighted by civil rights groups.

Looking at the broader context, Elon Musk initially purchased the Birdie app in October 2022 for $44 billion after months of negotiation. However, the current valuation of the company is only $20 billion, less than half of the original price. A significant factor contributing to the 50% decline in Twitter’s valuation can be attributed to a substantial retreat of advertisers.

Recent data indicates that over half of Twitter’s top 1,000 advertisers in September curtailed their expenditures on the platform within the initial weeks of January. Approximately 625 out of the top 1,000 Twitter advertisers, including major brands like Coca-Cola, Unilever, Jeep, Wells Fargo, and Merck, have redirected their advertising funds away from the platform as of January, as reported by CNN.

In the one year since Elon Musk’s acquisition of the microblogging platform, significant changes have occurred, including job cuts, the sale of office furniture, layoffs of janitors, the introduction of the blue subscription, and more. These developments underscore the challenges and transformations that X has undergone during Musk’s ownership, with financial implications and reputational damage being central concerns for the social media company.