When Elon Musk is asked about the future of X, the media brand once known as Twitter that he bought for $44 billion in 2022, he offers a web of tantalizing possibilities. The site, he says, will be an “everything app” used by hundreds of millions to not only post videos but do online banking, bet on sporting events, hook up with other users on dates, and even search for jobs a la LinkedIn.
It’s a bold plan, but is any of this actually happening? No, apart from users posting videos. What is happening—a reality Musk may be trying to obscure with his flights of fancy—is that ad revenue has tanked, brands are staying away, and, according to Fidelity, X’s market value has likely declined by roughly 70% since Musk bought it. Let’s go through Musk’s biggest plans for X one by one, and see if any of them might turn things around.
One of Musk’s first big bets is a pivot to video. To draw attention to this effort, he convinced Jimmy Donaldson, the YouTuber known as MrBeast, to post one of his videos on X last month. While Donaldson said the video made him $263,000 based on more than 150 million views, he also said the stunt was “a bit of a facade,” and that some advertisers likely bought ads on his video only after it was promoted. A number of X users said they saw the show in their feed multiple times, CNBC reported, but it was not marked as an ad.
According to a blog post by the company, a new video feature similar to TikTok’s infinite scroll has over 100 million daily users and more than half of them are from Gen Z, which X says is the fastest growing audience on the platform. The company also talks about letting users publish longer-form videos, and bragged that in December, users watched 130 years’ worth of videos 30 minutes or longer (although it’s not clear what “watched” means). X has announced video deals with celebrities such as former CNN host Don Lemon, and of course former Fox News host Tucker Carlson has a show on X.
Banking and payments is another of the big bets Musk talks about as the future of X: In an all-hands meeting in October, according to The Verge, he said the company was just “waiting on all the approvals” for doing financial transactions on the platform, which he said he expected within “the next few months.” So far, there has been no word on whether approval has been granted. But Musk isn’t just talking about payments. “If it involves money or securities, it will be on our platform,” he said at the all-hands. “You won’t need a bank account.” Musk also said recruiting on X was a natural fit because a user’s posts are the “single biggest indicator for whether they are excellent.”
Hiring or dating is one thing. But the idea that millions of users might entrust their financial and banking information to X requires a leap of faith that would take someone into orbit, given public perception of both the app and Musk. A big part of what’s led to the precipitous fall in advertising revenue—with each month in 2023 more than 50% below the same period in 2022, according to Reuters—and a similar decline in X’s market value is Musk’s repeated posting and/or agreeing with white supremacist views such as the Great Replacement theory, and other comments that many believe to be anti-Semitic.
Even if someone were to overlook those comments, it’s not clear that X has the infrastructure reliability to make payments or financial services work consistently enough for users to trust it. In December, an unknown failure took down the entire network, and in August, the company admitted that a glitch had somehow broken both images and links for an unknown number of tweets prior to December 2014. In May, a much-hyped interview between Musk and failed presidential candidate Ron DeSantis was plagued by glitches that made the event unviewable for embarrassing chunks of time.
Someone who felt comfortable betting some of their cash on NFTs or blockchain ventures might use X for those sorts of financial transactions, but it’s unlikely large numbers of normal users are willing to hand over their bank account numbers. So even if X were to take a percentage of each transaction or a fee for processing, it’s hard to see those kinds of revenues becoming a large proportion of the company’s income.
For better or worse, X’s primary revenue source continues to be advertising. In other words, it needs to sell ads to the same sort of companies and brands that Musk told to “go f*** yourself” during an on-stage interview as part of the New York Times‘ Dealbook conference. According to a Bloomberg report in December, X was on track to bring in about $2.5 billion in 2023—generating a little over $600 million in ad revenue in each of the first three quarters of the year, compared with more than $1 billion per quarter in 2022. Much of what passes for ads on X now seems to be low-quality branding and counterfeit luxury goods.
As the company’s revenue continues to lag, the clock is ticking on the debt Musk took on to finance his acquisition. The banks that lent him the money are facing significant losses on their debt if they try to sell, and even finding a buyer at all could be difficult: A number of firms that specialize in buying distressed debt told the Financial Times that there was no price at which they would be willing to buy the company’s financial obligations, given their doubts about CEO Linda Yaccarino’s ability to turn X’s revenue around.
The situation doesn’t look good. Musk had better hope one of his big plans for X works out before it’s too late.
Mathew Ingram is a longtime reporter and columnist who writes about how technology is changing the media landscape. The opinions expressed in Fortune.com commentary pieces are solely the views of their authors and do not necessarily reflect the opinions and beliefs of Fortune.
