Sociable: Musk’s newfound political influence could spark financial turnaround for X

While the perception of Elon Musk’s X project has shifted because the U.S. election, by which Musk helped Donald Trump regain the presidency, the corporate’s financials still don’t look great and could still pose an existential risk for the platform, if it could actually’t win more advertisers back.

Reportedly, X is now taking extreme measures to do exactly that, which even extends to threatening some former ad partners with legal motion in the event that they don’t resume spending.

And with Musk also now holding sway inside the U.S. government, the fears of potential retribution are very real and could help to get X’s financials back on the fitting track this yr.

Right now, nevertheless, X continues to be in a troublesome spot.

According to the newest financial performance data that X recently shared with potential investors, X brought in $2.6 billion in total net revenue last yr, which is significantly down on the $5.1 billion that Twitter generated in its last full yr before Musk bought out the corporate (2021).

But X has also cut costs by culling 80% of staff and shutting down facilities, including several international offices. Yet even so, when combined with X’s existing debt burden, the corporate stays near the sting.

As a part of his takeover of the corporate, Musk borrowed a major amount from various banks, which has loaded X with debt burden of around $1.2 billion in interest payments per yr.

That leaves little room to maneuver, and up to date reports suggest that Musk informed staff last month that the corporate is barely breaking even.

Bloomberg also notes that there are numerous discrepancies in X’s most up-to-date financials, which also raises concern:

“The 2024 figures weren’t audited, however the 2023 figures were [and] none of them would qualify for generally accepted accounting principles, also referred to as the GAAP standard that the US Securities and Exchange Commission requires for publicly traded corporations.”

So while X is reporting that its revenue performance was relatively stable in 2024, the actual reporting of those numbers is questionable and these figures wouldn’t be acceptable from any publicly listed company.

Yet X is eyeing one other fundraising round, reportedly at a $44 billion valuation. Which is nowhere near what most investors now value the corporate at, but X appears to be of the assumption that Musk’s political influence will likely be enough to spice up its value, even when the market price doesn’t match.

And X can be trying to use that influence to pressure its former ad partners.

Last August, X launched legal motion against the Global Alliance for Responsible Media (GARM) and its chief coordinator, the World Federation of Advertisers (WFA), in addition to chosen GARM members, over what it claimed had been “a bunch boycott by competing advertisers of one of the crucial popular social media platforms within the United States.”

In the initial lawsuit, X named Unilever, Mars and CVS, amongst others, putting specific big name brands within the highlight and dragging them into what could be expensive legal motion.

Shortly after, Unilever agreed to resume promoting on X, with a view to get its name faraway from the lawsuit. Then in January, X threatened so as to add other big-name brands into the motion, essentially using it as a method to pressure them to resume their ad spend. In February, X added seven more big-name brands into the lawsuit.

Some advertisers have also suggested that X is now directly threatening that they’ll be added to the motion as well, in the event that they refuse to resume their ad spend, and again, with Musk also spending his days within the White House, and influencing government policy, there are real concerns that not returning to X could have serious business impacts, which could bring more ad partners back to the app.

Already, Amazon, Apple, and Kraft have resumed promoting on X, despite ongoing concerns around brand safety in ad placement.

Which puts X in an odd situation, in that it’s unimaginable to evaluate the potential of the app, without understanding the broader pressure that brands feel in avoiding the platform.

Which is why President Trump’s victory was so vital to the app, because now, X and Musk exert an additional level of sway that could have an actual impact on these brands, which can force them to spend with Musk to stay in his favor.

And with Musk’s xAI project also raising funds, which could also drive additional income towards X (in paying for access to X data), X could be in a significantly better financial situation by this time next yr, through implied pressure alone.

Make no mistake, a Trump loss would have been devastating for X, and may possibly have seen the app shut down this yr. But now, every little thing is different, and that could see X have a major turnaround, despite refusing to shift on previous brand concerns.