Elon Musk Admits Financial Struggles for X; Banks Move to Offload Debt Amid Revenue Challenges

Elon Musk has admitted in a leaked email that X is facing stagnant user growth and declining revenue, as banks prepare to sell off $13 billion in debt tied to his acquisition.

Elon Musk has acknowledged significant financial challenges at X, the social media platform formerly known as Twitter, revealing in a leaked email that the company is “barely breaking even” with stagnant user growth and “unimpressive” revenue.

The email, reported by The Wall Street Journal, highlights ongoing struggles following Musk’s controversial $44 billion acquisition in 2022. The admission comes at a time when lenders, including Morgan Stanley and Barclays, are preparing to offload portions of the $13 billion debt used to finance the purchase.

Related: EU Expands Probe into Elon Musk’s X Over Content Moderation Compliance

The platform, burdened with over $1 billion in annual interest payments, has faced declining advertising revenue and competition from emerging rivals.

In the email, Musk emphasized X’s role in shaping public discourse but acknowledged, “Our user growth is stagnant, revenue is unimpressive, and we’re barely breaking even.”

Debt Sale Signals Financial Pressure

Banks that backed Musk’s acquisition of X are reportedly moving to sell portions of the debt at a discount, seeking to reduce their financial exposure.

According to The Wall Street Journal, lenders aim to sell the loans at 90 to 95 cents on the dollar, reflecting diminished confidence in the platform’s ability to generate stable revenue.

Typically, large loans of this nature are sold soon after issuance, but volatility in X’s performance has forced banks to hold onto the debt for over two years.

Related: Meta Unveils Video Editing App to Capture Bytedance CapCut’s Market Gap Amid TikTok Struggles

The debt, valued at $13 billion, has been a persistent challenge for X’s finances. With interest payments exceeding $1 billion annually, the platform’s reliance on advertising revenue remains a key vulnerability.

While some advertisers have returned, many remain cautious due to concerns about brand safety on the platform, which has adopted a controversial approach to content moderation under Musk’s leadership.

User Decline and Intensifying Competition

X has struggled to retain its user base as competitors like Meta’s Threads and the decentralized platform Bluesky gain traction.

Threads, launched in mid-2024, leveraged Instagram’s established user base to quickly attract disillusioned X users.

Bluesky, known for its decentralized model, has also emerged as a popular alternative for users seeking a community-driven platform. These competitors have capitalized on dissatisfaction with X’s moderation policies and Musk’s management style.

Related: As TikTok Falters, Bluesky Steps In With Custom Video Feeds

Recent data paints a mixed picture of X’s user activity. According to Similarweb, X’s U.S. monthly active users declined by 20% since Musk’s takeover, dropping to 73.5 million as of late 2024.

Meanwhile, Sensor Tower reported 25 million daily active users in the U.S. following the 2024 presidential election. While the latter figure suggests some resilience among core users, it highlights the challenges X faces in expanding its audience.

Content Moderation and Advertising Challenges

Musk’s vision for X has centered on minimizing content moderation, emphasizing free speech and reduced censorship. This approach has drawn criticism from advertisers and advocacy groups while influencing competitors like Meta.

Meta recently announced the end of its third-party fact-checking program, replacing it with a Community Notes-style system inspired by X. Community Notes allows users to add context to misleading or false posts, creating a crowdsourced moderation model.

Despite Musk’s claims that X plays a pivotal role in public discourse, advertisers remain hesitant. The platform has struggled to reassure brands concerned about its association with hate speech and political extremism.

Musk’s vocal support for Donald Trump during the 2024 presidential election and a controversial gesture at Trump’s inauguration have further complicated X’s reputation. These incidents, coupled with Musk’s unpredictable public behavior, have raised questions about the platform’s ability to rebuild advertiser trust.

Expanding Features and Strategic Vision

Musk has positioned X as a platform for innovation, integrating artificial intelligence and financial services into its offerings. Recent additions include a job listing feature and a revamped video tab, reflecting his broader ambitions for the platform.

Musk has also hinted at plans to transform X into a comprehensive app capable of handling financial transactions, though these initiatives remain in their early stages and have yet to deliver tangible results.

In the leaked email, Musk highlighted X’s influence, stating, “Over the last few months, we’ve witnessed the power of X in shaping national conversations and outcomes.” However, this optimism stands in contrast to the platform’s financial struggles and its ongoing battle to retain users and advertisers.

Markus Kasanmascheff
Markus Kasanmascheff
Markus has been covering the tech industry for more than 15 years. He is holding a Master´s degree in International Economics and is the founder and managing editor of Winbuzzer.com.

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