It’s been quite an eventful year for the social network formerly known as Twitter — and not in a good way.
Sure, X got a new name and CEO, Linda Yaccarino. But the platform seems to be fighting a thousand battles on a thousand fronts.
We’ve seen an advertiser exodus due to owner Elon Musk’s controversial moves, including sharing antisemitic content and unbanning Alex Jones. The company’s valuation has plummeted. Musk is at war with some of X’s biggest advertisers. And in November traffic from Android and iPhone users was down 12.4% year over year, according to data.ai.
It’s been… a lot.
“If I were to sum up the year for Twitter, now X, in one word, it's decimation,” explained Forrester research director Mike Proulx. “It's decimation of the Twitter brand, it's decimation of the company's primary revenue stream, it's decimation of the company's valuation.”
And things aren’t looking any better going into 2024.
Musk’s tumultuous year
Musk’s year as Twitter CEO kicked off in March when the Information and the New York Times reported that the company’s valuation had fallen from the $44 billion he paid for it in 2022 to just $20 billion. In May, the Wall Street Journal reported that Fidelity, an investor, had cut its valuation of Twitter to $15 billion. Good thing Musk is the world’s richest person.
Outside X’s valuation, Musk also had to contend with the fallout from his own posts. Throughout the year he made inflammatory comments about race, accusing the Anti-Defamation League (ADL) of impacting Twitter’s revenue and generating antisemitism on the platform.
In November, left-leaning Media Matters for America issued a report saying that ads on X for companies including Apple, IBM, and others appeared next to Nazi content, which sent advertisers fleeing. Musk is now suing Media Matters claiming it manipulated the platform to get ads to appear next to the objectionable content.
The same month, Musk appeared to show support for an antisemitic post from another user, drawing condemnation from the White House and the ADL, among others, and possibly precipitating his trip to Israel.
Musk doesn’t seem too interested in winning back advertisers either. After apologizing for his tweet during an interview at the New York Times DealBook Summit, he cursed out advertisers for leaving X, specifically calling out Disney CEO Bob Iger.
With larger advertisers ditching X, the company is looking to woo smaller advertisers, the Financial Times reports.
“It has become clear with the most recent bout with advertisers that … Main Street big brands are done advertising on the platform,” Proulx said. “The days of getting lots of sponsorship and ad revenue from major brands have come to an end.”
The company is also leaning further into subscription revenue, offering premium features like access to X.AI’s Grok chatbot and no ads. Those options, however, require a Premium+ subscription, which will set you back $16 per month or $168 per year.
Odds for recovery?
Musk’s wild year will likely keep X from ever becoming a massive success like rivals Instagram, Facebook, or TikTok. The company was already struggling to draw users under its prior regime, but Musk’s outbursts will only hurt any efforts to turn that around. And upstarts like Meta’s Threads could further cut into X’s market share.
“Twitter's biggest vulnerability at the moment is that the space is unstable and during this time of instability, someone could come in with a new model and garner trust … get users there … network effects can kick in quite quickly,” explained NYU Stern School of Business professor of technology, operations, and statistics Vasant Dhar.
Even if Threads isn’t winning, it’s a platform waiting to capitalize if X trips and falls further.
Another fix? Musk has said he plans to make X a kind of everything app similar to China’s WeChat, but after laying off thousands of employees it’s unclear how he’ll be able to scale.
“X as a business is going to be around for the next five to 10 years. I don't think it's at risk of going under,” explained Deepwater Asset Management managing partner Gene Munster. “I just think the opportunity to appeal to everyone has … been taken off the table.”
And on top of that, all of this is hurting Tesla (TSLA).
Still, there’s always hope for X. Despite it all, people are still tweeting. Or X-ing. 2024 might still be a year of opportunity.
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Daniel Howley is the tech editor at Yahoo Finance. He's been covering the tech industry since 2011. You can follow him on Twitter @DanielHowley.
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