New Insights Suggest X Is Struggling To Make Money

While the public backlash against Elon Musk’s X project has been significant, particularly in the wake of the U.S. election, the latest financial data from the company shows that X is still bringing in money, and had a better-than-expected revenue boost in the Christmas period.

Which is the good news for the app, but the bad news is that because of its debt burden, X is still likely to post a loss for the full year.

According to a new report from Bloomberg, some of the banks that loaned Musk money to fund his Twitter purchase are now looking to offload that debt. And within those negotiations, they’ve shared insight into X’s current financial situation.

As per Bloomberg:

“The debt is being pitched with a set of financials showing roughly $1.2 billion of adjusted earnings before interest, taxes, depreciation and amortization in 2024, according to people familiar with the matter. That includes about $400 million of EBITDA on $710 million of revenue in the final three months of the year, an increase from the two preceding quarters that indicates an election-related bump for the social media platform.”

Bloomberg says that $1.2 billion in earnings is “roughly flat” from the period before Elon acquired the app.

Which is good news for X, in that the much-publicized advertiser exodus is no longer tanking its earnings. But there is also a key proviso here, being the interest that X also has to pay on the debt that Musk took on to purchase the app.

As part of taking on these loans, Musk also loaded X with a cumulative debt burden of around $1.2 billion in interest payments per year. Which is exactly the amount that Bloomberg’s reporting suggests the company brought in, and as Bloomberg notes, that figure is before interest.

Which likely suggests that X made no money at all in 2024. Even with Musk cutting 80% of its staff, and slashing costs wherever he can.

That doesn’t leave a lot of room for X to improve, other than simply selling more ads, which, due to Musk’s own divisive approach, remains a hard sell for many brands.

Though that’s, reportedly, what Musk has been pushing, with recent reports suggesting that Musk has sought to motivate X staff to do more, noting in a recent all-staff email that “user growth is stagnant, revenue is unimpressive, and we’re barely breaking even.”

That aligns with the above notes on X’s finances, though Musk himself denies that he ever sent this message.

Whatever the truth is on that front, it does seem that the essence of that message is correct, with X still sitting on 250 million daily active users, where it’s been since November 2022, and its expanded revenue bets, like X Premium, failing to catch on in any significant way.

Maybe now that Trump is in power, underlining his support among U.S. citizens, that could open up more opportunities for the platform, and we may already be seeing this with reports that Amazon is resuming its X ad spend, and Apple is reconsidering its decision to pull its ads. The view here is that maybe X's approach is more reflective of what people want than various corporations had expected, therefore avoiding it is not as impactful a statement as they might have initially believed. It could also be seen as a tactical move to appeal to Musk, who has such close ties with the Trump Administration. 

At the same time, Elon continues to involve himself in other elections and political movements, which could also reap similar benefits for X.  

Though it may also have the opposite effect, and at this stage, it’s hard to see a definitive path for X to dig itself out of the significant financial hole that it finds itself in.

Does that really matter?

I mean, Elon’s the richest man in the world, surely he can keep X running off his own bat, if he really wants to. Right?

That’s true to a degree, but he also has investment partners, while even with so much of his own money, Musk still needs X to eventually stand on its own.

There are options that Musk could explore to get X more funding, including funneling money from his xAI project back into the app (given that X is a key data source).

But for X itself, the limited performance data we do have doesn’t look great, even with a slight improvement in its fortunes to end 2024.