Elon Musk's X, formerly known as Twitter, is facing the looming threat of bankruptcy as advertisers continue to abandon the platform. Musk's recent profane attack on advertisers has left experts puzzled and raised concerns about X's ability to survive the ongoing ad boycott.
Last year, Musk acquired X for a staggering $44 billion, and now, the company's heavy reliance on advertising revenue, constituting around 90% of its income, is proving to be a significant vulnerability. Musk himself acknowledged that an advertiser boycott could be the downfall of X, emphasizing the potential bankruptcy risk. The ad boycott has escalated further with retail giant Walmart joining the list of companies no longer advertising on X.
While Musk has attempted to diversify revenue streams with ventures like an audio and video calls service, the immediate impact falls short of replacing the substantial losses from advertising. X's financial situation is exacerbated by servicing loans of approximately $13 billion, with annual interest payments reaching $1.2 billion.
Musk's reluctance to inject more of his personal funds into the company raises questions about potential solutions. While renegotiating with banks for more favorable terms is an option, the risk of bankruptcy remains if these negotiations fail. In such a scenario, creditors might push for a change in management, leading to a complex and messy legal battle.
X has potential despite the dire situation because of Musk's plan to make it a "everything app," which would include everything from conversation to online payments. Additionally, the platform has a significant data repository that may be used to train chatbots. These long-term tactics, though, might not offer any quick fixes for the financial problems brought on by the advertiser flight.
The tech and business worlds continue to be intrigued and concerned by Musk's unusual strategy and the platform's uncertain future as X navigates this crucial moment. Many people are speculating about whether the business can weather the storm or if bankruptcy is an inevitable result as Musk and X's next moves are still unknown.