Controversy Surrounds Elon Musk's X Platform: Advertisers Leave, Uncertain Future Ahead for X

Elon Musk's X platform faces turmoil as major advertisers exit. Explore the fallout and uncertainties surrounding the controversial situation.

Nov 30, 2023 - 12:38
Nov 30, 2023 - 12:39
Controversy Surrounds Elon Musk's X Platform: Advertisers Leave, Uncertain Future Ahead for X
Controversy Surrounds Elon Musk's X Platform: Advertisers Leave, Uncertain Future Ahead for X

Elon Musk's recent outburst at a New York Times DealBook event, industry analysts are anticipating a potential mass departure of advertisers from his social-media platform, X. The controversy erupted after major brands, including Walt Disney and Warner Bros. Discovery, suspended their advertising on X earlier this month. Musk's endorsement of an antisemitic post, followed by a profanity-laced tirade against advertisers, has raised concerns about the platform's future.

During the New York Times DealBook event, Musk apologized for his controversial post but quickly shifted to criticize advertisers who chose to withdraw from the platform. Acknowledging the risk of bankruptcy for X, formerly Twitter, Musk suggested that the blame for a potential collapse would lie with the departing advertisers, not himself.

Insider Intelligence analyst Jasmine Enberg challenged Musk's perspective, stating, "If anyone is killing X, it's Elon Musk - not advertisers." Enberg emphasized the impact of Musk's platform policy decisions, staffing cuts, tweets, and antagonistic comments as potential contributors to X's decline.

X has faced criticism for lax content moderation, particularly from advertisers concerned about their ads appearing alongside inappropriate content. Ad spending on X in the United States has seen a significant decline of 64% from January to October this year compared to the same period in 2022, according to data from media analytics firm Guideline.

D.A. Davidson & Co analyst Tom Forte expressed concern about the potential departure of more companies from X, posing a risk to the platform's short-term advertising revenue. This situation underscores the importance of X's subscription efforts, with suggestions that over half of its revenue may need to come from subscriptions.

Research firm reported a 19% decline in U.S. monthly active users since Musk acquired Twitter last year. Major players like Apple, IBM, Sony, Disney, Comcast including NBC Universal, and Paramount collectively accounted for 7% of total U.S. ad spend on X through October this year, according to Sensor Tower data.

If more significant brands decide to leave, X may need to rely more on smaller advertisers to sustain its revenue, as noted by Sensor Tower. With Musk stating that Twitter is worth less than the $44 billion he paid for it, concerns persist about the platform's value and viability, especially if advertisers continue to take offense to Musk's actions and statements.

Russ Mould, investment director at AJ Bell, remarked, "It is hard to argue that [Twitter's value] will change quickly if advertisers take deep offence to what he said yesterday." The situation raises questions about the future direction of X and its ability to recover from the ongoing challenges it faces.

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