X (formerly Twitter), the social media company founded in 2006, is now ubiquitous via its posts—formerly called tweets—on the Internet and all forms of media. It's best known for news-breaking tweets from politicians and celebrities, but it provides a platform for millions of users to publish their thoughts, interact, share content, and read breaking news.
The platform itself is free to use for individuals and businesses alike, though many of the features that enhance user experiences (such as editing posts and user verification) are now locked behind a X Premium subscription with prices starting at $3 up to $16 a month.
X Premium (formerly Twitter Blue) first launched in 2021 as a subscription service offering enhanced features like undoing a tweet and saving bookmarks to folders. Musk relaunched the program in November 2022 and introduced major changes like a blue checkmark in the features for paying users.
Once a user has created an account, they can post messages of up to 280 characters and up to 2,400 times per day, which are automatically distributed to followers in a feed that is constantly refreshed.
X parent, X Corp., (formerly Twitter Inc.), divides its revenue into three categories: the sale of advertising services, the sale of data licensing and other services, and the recently incorporated Blue subscription. Although X has lost nearly half advertising revenue since Elon Musk takeover, it still constitutes the vast majority of the company's revenue.
X's major competitors include other social media companies like Facebook parent Meta Platforms Inc. (META), Google and YouTube parent Alphabet Inc. (GOOG), Snap Inc. (SNAP), and others.
Key Takeaways
- X is a social media company providing a platform for users to interact in real time.
- On April 25, Twitter reported it would be acquired and taken private by Elon Musk in a $44-billion acquisition. After a rocky period, including Musk stating that he would no longer buy the company, the deal was completed on Oct. 27, 2022.
- Parent company Twitter Inc. changed its name to X Corp. with the social media platform continuing to be called Twitter for a while until it also changed its name to X in July 2023.
- X generated $3.4 billion revenue in 2023, an 23% decline year-on-year.
- The company generated the vast majority of its revenue (74%) through advertising services in 2023.
- X generated $11 million via X Blue in its first three months since it was relaunched in December 2022.
X's Industry
Twitter, Inc. was initially a social media company based in San Francisco, CA. It operated the social networking service Twitter and previously the Vine app and Periscope livestreaming service. In 2023, Twitter Inc. ceased to be an independent company after merging with a newly formed shell firm called X Corp.
Instagram, TikTok, YouTube, Facebook, and WhatsApp are also leaders in the social media industry with monthly active users ranging from 3.03 billion (Facebook) to 1.59 billion (TikTok).
According to Grand View Research, the social networking app market was valued at $49.09 billion in 2022 and is expected to grow at a compound annual growth rate of 26.2% from 2023 to 2030. Key factors that are driving the social networking app market growth include the rising demand for the 5G technology, the surge in adoption of personalized feed-based app, and the growing demand for encrypted and self-destructive messaging-based social apps.
X operates worldwide as a microblogging service through a platform for putting out content in a quick, fast way. X solved the problem of Facebook posts and popular blogs thatprovide articles that can be too long to read.
As of 2023, X has an estimated 421 million monthly active users worldwide.
X's Financials
X generated $4.4 billion revenue in 2022, an 11% decrease from 2021 figures ($5 billion).
Revenue is expected to decrease in 2023 due to a loss of advertising, and in fact, the company has lost almost half of its advertising revenue since Elon Musk’s acquisition in October 2022. Many global advertisers left the company after changes to X’s service and content moderation rules. Agency executives who have worked with X said their clients continued to limit spending on the platform due to “inconsistent support from Twitter and concerns about the persistent presence of misleading and toxic content.”
Elon Musk declaredthat the company hasn’t seen yet an increase in sales and confirmed cash flow remains negative and the company is struggling with a heavy debt: $13 billion of debt has to be paid by the end of July 2023. Still, X generates the majority of its revenue through advertising (90%, or four billion in 2022). It also generated about $570 million from data licensing (about 10% of total revenue).
The loss of advertising demand has fueled the need to find alternative revenue streams and rebuild the company’s revenue model. X Blue is part of this strategy: a subscription service that allows users to access premium features and benefits on the app and that is available for $11 per month (or the local equivalent and $114.99 a year) on iOS and Android, and $8 ($84 a year) on the web.
X Blue made just $11 million on mobile in its first three months since it was relaunched on Nov. 4, 2022. Although the $11 million seems small when compared to the two other revenue streams, this figure doesn’t cover web-based subscriptions. It’s still uncertain how this revenue stream will evolve over the coming months, in part because the $11 million figure doesn’t specify how much comes from monthly subcriptions vs. annual subscriptions.
X's History, Leadership, and Recent Developments
As of the end of July 2023, Twitter officially changed its name to X. The rebrand is yet another step in the ongoing transformation of the social media company, which changed the blue bird icon to the new black and white X logo. X has debuted the new logo on its desktop version, and a sign reflecting the company's new name appeared on its San Francisco headquarters.
Twitter was created by former Odeo employees Jack Dorsey, Noah Glass, Evan Williams, and Biz Stone, and publicly launched in July 2006. Originally, the site used SMS to send tweets onto the network and its defining features were the tight limits placed on each post or“tweet” (140 characters, doubled to 280 in 2017).
On April 25, 2022, Twitter announced that Elon Musk, founder and chief executive officer (CEO) of Tesla Inc., would acquire the company for $44 billion. Upon closing, the company would become privately held with all shareholders receiving $54.20 in cash for each share of the company owned.
The road to sealing the deal was a rocky one but Elon Musk completed his acquisition of Twitter on Oct. 27, 2022. Musk acted as CEO of Twitter until he stepped down in June 2023 and was replaced by Linda Yaccarino, who previously was the chair of advertising sales for NBCUniversal.
Soon Musk began making changes to the company and introduced a series of reforms and management changes, rising concerns about the company's ability to maintain its platform. Its workforce was drastically reduced by laying off half of the employees on Nov. 4, 2022 in order to cut costs (a measure taken to compensate for the drop in the company’s revenue). In total, about 80% of X’s staff has been laid off since Musk took over the company, or more than 6,000 people. As of 2023, the social media platform has only 1,500 employees, down from under 8,000 who were employed at the time of the acquisition.
On Nov. 20, 2022, Musk also reinstated Donald Trump’s account (the former President was banned from the platform for inciting violence at the Capitol riots in 2021) causing advertisers to pull off due to what was seen as relaxed content moderation policies. More than half of Twitter’s top 1,000 advertisers in September 2022 (including major brands such as Coca-Cola, Unilever, Jeep, and Wells Fargo) were no longer spending on the platform in the first weeks of January 2023.
Also in December 2022, the Twitter Blue subscription service was relaunched as a way to generate revenue. In 2023, Twitter Inc. ceased to be an independent company after merging with a newly formed shell X Corp., a privately owned company operating within the X Holding Co.
What Is the Financial Status of X?
On July 15, 2023, Elon Musk declared in a post that his company is having a negative cash flow due to a “50% drop in advertising revenue plus heavy debt load.”
What Is X Blue?
X Blue is a paid subscription service intended to “elevate quality conversations on the platform.”The additional features designed to improve user experience and promote higher quality allow users to expand their reach, see fewer ads, and customize their experience on the platform.
X Blue has two different costs: if you purchase it in your web browser, it costs $8/month or $84/year. If you sign up through the iOS or Android app, X Blue it costs $ $11/month or $114.99/year.
Which Social Media Generates the Most Revenue?
Facebook and Instagram (both owned by Meta Platforms) generate the most revenue. Combined, they are responsible for around half of all revenue generated by social networking apps. As of Q4 2023, Facebook generated $20.17 billion, and Instagram $18.33 billion.
The Bottom Line
X generated $4.4 billion revenue in 2022, a 11% decrease on 2021 figures. Revenue is expected to be worse in 2023 due to a loss of advertising revenue. Still, 90% of X’s revenue came from advertising in 2022. X Blue, a paid subscription service, was launched as a way to generate non-advertising-based revenue, but the question on how much subscriptions will bring in the upcoming months remains uncertain.
