Geld in Sicht: Warum Trumps Sieg Musks X-Einnahmen ankurbeln wird

Elon Musk’s support for newly re-elected U.S. President Donald Trump is expected to boost the struggling business of X, and some marketing experts are ready to return to the platform to seek favor with the new administration.

Media leaders told the Financial Times that brands are preparing to advertise again on X, as its billionaire owner is likely to gain an influential role in the White House.

Recall that the platform’s revenues have dramatically fallen since Musk’s $44 billion acquisition two years ago, with some investor estimates suggesting its current value is less than $10 billion.

Divided opinions

Brands have expressed concern that Musk has removed moderation, and groups like Disney, IBM, and Apple left the platform last year. Musk responded by telling large companies to ‚f*** off‘ for pausing advertising. Nevertheless, Lou Paskalis, CEO of marketing consulting firm AJL Advisory and former media director at Bank of America (BoA), stated that some marketers are likely to redirect part of their marketing budgets to X as a ‚political lever‘ to seek government contracts.

He added that companies will seek to gain ‚Elon’s grace,‘ to whom Trump has granted broad powers as the face of the new Department of Government Efficiency.

– It could be seen as an official channel for White House communication – said the head of an advertising agency to FT, adding that Trump’s victory has given Musk new legitimacy, as well as power over brands in sectors that may face new regulatory constraints from Trump.

Some agree that X will become a very important platform again, while others describe it as a ‚mess‘ and believe that brands will not want to take that risk.

Musk predicted a return of X’s business after he publicly supported Trump’s campaign via the platform and more than $100 million in political donations. – Some of the boycotts are starting to lift – he told well-known podcaster Joe Rogan ahead of the U.S. elections, adding that ‚we’ll see if Trump wins… a larger part of the boycotts is lifting.‘

Since the election, Musk and his allies have praised X as an integral part of the election victory and as a home for conservative political discourse. Last week, Musk posted a chart showing a jump in ‚global user seconds‘ to 434.1 billion from less than 400 billion in the days leading up to the vote.

– The highest usage of this platform ever – he wrote on X.

‚Never bet against Elon‘

CEO Linda Yaccarino responded to the tweet claiming that X will grow exponentially and become a vital spokesperson for political candidates, writing: ‚Duty calls.‘ Partner at Sequoia Capital Shaun Maguire said that while his Silicon Valley firm was ‚mocked‘ for investing $800 million to finance Musk’s acquisition, ‚I’m confident we’ll be the last ones laughing. Never bet against Elon.‘

However, the elections had a mixed impact on X’s audience and engagement. According to Similarweb, X’s website had its best day for traffic in the U.S. so far this year last Wednesday, the day after the U.S. presidential elections, and election day itself was in second place. Daily active users of the app also surged, the data shows.

However, it was also revealed that 115,000 U.S. users deleted their X accounts on Wednesday, the largest single day for account cancellations since tracking began, while competitors like Bluesky and Meta Threads also seem to have increased their user numbers.

Musk’s closeness to Trump has also led to speculation that X could merge with the newly elected president’s own online platform, Truth Social.

– Whether by coincidence or design, Musk has not created a new Twitter, but a new Truth Social, even though Trump is not a majority shareholder – said Bruce Daisley, former head of X’s operations in Europe, the Middle East, and Africa.

It is unclear how the elections will affect the seven banks burdened with approximately $13 billion in debt related to Musk’s acquisition. The banks, led by Morgan Stanley, had generally expected to continue holding the loan until 2025, given the fire sale prices they would likely have to offer to attract potential buyers until X’s business stabilizes, according to a source involved in the situation.

X has continued to pay interest on the debt, even amid business challenges. Bankers recently in September abandoned the possibility of convincing Musk to use his Tesla or SpaceX shares as collateral for a margin loan to pay off part of X’s loans.

Earnings in sight

Reviving X’s struggling business will require a lot of work. Total U.S. ad spending among the top 100 advertisers on X in the first half of 2024 decreased by 68% compared to the first half of 2022, before Musk bought the platform, according to estimates from market research group Sensor Tower.

Data shows that only seven of the top 200 advertisers on X who stopped spending on ads in the last quarter of 2022 returned to the platform in 2024. They were mostly replaced by advertisers who are completely new to X or did not exist in 2022, while spending significantly less than previous merchants.

Emarketer estimates that the company will earn $1.9 billion from advertising this year, down from $2 billion last year and about $4.5 billion in 2021, before the acquisition. Musk has privately called brand executives to chastise them for leaving the site, while publicly highlighting others like Disney’s Bob Iger, and has also taken legal action. In August, X filed a lawsuit against the Global Alliance for Responsible Media, a coalition of brands and advertising agencies, as well as members such as Unilever, Mars, and CVS Health. The defendants are alleged to have ‚colluded‘ to boycott X after Musk’s acquisition, limiting consumer choice in violation of antitrust laws.

Garm has since closed, stating that the claims ‚misinterpret its purpose,‘ but have ’significantly drained its resources and finances.‘

Industry sources suggest that the action had an effect. Last month, after Unilever resumed spending on X, it was quickly dropped from the lawsuit. One advertiser said their agency was warned after the legal action to be careful about what it internally communicates about the billionaire and X in writing.

Other advertising executives said that many brands will still hesitate to trust X and claim that its ad offering is inferior to competitors like Meta and TikTok.

X has increasingly become ‚Elon’s echo chamber,‘ said one executive at an advertising firm. ‚It’s a cesspool and many clients don’t want to be part of it.‘

– Trump’s victory could mean that brands give X a second chance in 2025 – said Richard Exon, founder of the advertising agency Joint, but warned that ‚it would be wise to proceed with utmost caution.‘