After Elon Musk’s acquisition of Twitter, now rebranded as X, the platform has experienced a steep decline in value. Investors have recently reported that the platform has lost about 75% of its value since Musk took over. This sharp drop raises questions about the leadership decisions made and the platform’s future prospects.
What’s Happening & Why This Matters
Value Plummets Post-Acquisition
Since Elon Musk’s $44 billion acquisition of Twitter in 2022, the platform’s financial health has deteriorated drastically. According to investor reports, X is now valued at just a fraction of its purchase price, losing nearly 75% of its worth. The rapid drop in value is primarily linked to advertiser retreat, controversial content moderation policies, and user dissatisfaction with the platform’s direction under Musk
When Musk purchased Twitter, expectations were high. However, decisions like reducing content moderation and introducing paid verification upset many users and advertisers, leading to a significant loss of ad revenue. Advertisers, the primary source of Twitter’s income, left the platform over concerns about brand safety, and the introduction of X Blue, a subscription service, failed to fill the revenue gap.
Revenue Challenges and Business Model Changes
Musk’s attempt to reshape X’s business model has faced numerous challenges. The platform saw a sharp decrease in revenue, reportedly dropping to half of what it was before the acquisition. While Musk aimed to boost revenue through subscriptions, the strategy has yet to gain enough traction to replace lost ad income. Additionally, the platform’s user experience has seen changes that have alienated portions of its audience.
For advertisers, the uncertainty surrounding content moderation and brand safety became a major sticking point. With major companies pulling their ad budgets, X has struggled to attract new advertisers and retain its key financial backers. The introduction of the subscription-based X Blue verification, which was intended to be a new revenue stream, has only had a limited impact on earnings.
Employee Layoffs and Organizational Shifts
Another contributing factor to X’s decline has been internal instability. Musk implemented sweeping layoffs that eliminated a large portion of Twitter’s workforce. Many of the roles that were cut included those responsible for content moderation and platform safety, further contributing to advertisers’ unease. The company’s leadership team has also undergone constant turnover, making it harder to execute a clear, cohesive strategy to turn around the platform’s fortunes
This combination of leadership shifts, changes in business strategy, and a major reduction in workforce led to a significant disruption in the daily functioning of X. As a result, it’s been difficult for the platform to stabilize itself financially and rebuild its reputation with both users and advertisers.
What Investors Are Saying
Investors are now left questioning Musk’s decisions. Initially, many backed the acquisition under the belief that his leadership would innovate and transform the platform. But as X’s value plummeted, confidence in Musk’s vision has waned. Industry analysts have pointed out that Musk’s hands-on approach has complicated the platform’s management. His controversial moves, such as bringing back previously banned accounts and making user verification a paid feature, have caused more harm than good in the eyes of advertisers and users alike.
With the platform continuing to lose value, some investors are beginning to consider options for recouping losses, though no concrete strategies have been laid out publicly.
TF Summary: What’s Next
X’s next steps remain uncertain, but open. Musk’s efforts to redefine the social media platform has faced numerous setbacks, from revenue loss to declining user trust. As X tries to reclaim its value and attract advertisers, it will need to stabilize its leadership, win back user confidence, and revamp its business model. Whether or not Musk fully steers X back to profitability remains to be seen. Investors, users, and Musk fans & detractors are watching closely for any recovery signs or further decline.