Elon Musk recently admitted in an internal letter that X, the platform formerly known as Twitter, is “barely breaking even.” In a time of fluctuating user engagement, inconsistent revenue, and increasing debt, Musk remains determined to keep X afloat. While other social networks have taken inspiration from X’s free speech stance, the platform faces mounting financial and user retention challenges. Let’s dive into X’s current state and what it means for its future.
What’s Happening & Why This Matters
Musk Acknowledges X’s Financial Struggles
In a candid letter to employees earlier this month, Musk shared the harsh reality of X’s financial situation: user growth is stagnating, and revenue is underperforming. Despite this, Musk pointed to X’s influence in shaping national conversations and driving discussions on free speech, referring to the platform’s impact as a “national conversation shaper.”
However, the struggles are evident. Musk’s $44 billion acquisition of Twitter in 2022 has left X with $13 billion in debt. Now, bankers from Morgan Stanley, Barclays, and Bank of America are working to offload some of the debt to investors. To succeed, they must persuade third-party investors of X’s long-term viability. This is crucial for securing the platform’s financial future.
Adverse Effects from Advertiser Exodus
A major contributor to X’s financial challenges has been the advertiser exodus. Top brands’ departures following their ads being placed next to controversial content have added significant pressure. Musk’s response to these brands was blunt, telling them to “go f–k yourself.”** In retaliation, X filed a lawsuit, which is still ongoing. The lawsuit and the platform’s controversial content moderation policies have alienated many advertisers.
Rising Competition and User Attrition
Musk’s vocal political views have also driven many users away from X. After Musk’s endorsement of President Donald Trump and his appearance at a rally for the far-right German AfD party, numerous U.S.-based users began deactivating their X accounts. According to Similarweb, around 115,000 users left the platform after Election Day in 2024.
As X struggles to maintain its user base, alternative platforms like Bluesky, Meta’s Threads, and Mastodon have seen impressive growth. Bluesky, for instance, experienced a massive surge, with its user base growing nearly ninefold, from 2.89 million to 25.94 million.
X’s Path Ahead
Musk remains committed to X’s future despite these setbacks, reiterating the platform’s potential to remain relevant in shaping global discourse. His focus on free speech and the controversial Community Notes system inspired others, such as Meta, to adopt similar features for fact-checking. However, X’s future depends on how successfully it can address its financial troubles, retain users, and rebuild trust with advertisers.
TF Summary: What’s Next
Musk’s admission of X’s financial struggles sheds light on the platform’s tough road ahead. X must adapt quickly as advertisers continue to flee and users search for alternatives. The platform’s future will depend on whether Musk can navigate its financial burdens, overcome user attrition, and regain advertiser confidence. As Bluesky and Threads continue to gain traction, X faces a pivotal moment in its evolution.
— Text-to-Speech (TTS) provided by gspeech.