Elon Musk’s $44 billion purchase of Twitter in October 2022 was supposed to be a game-changer. Instead, the platform—now called X—has seen falling revenue, a shrinking user base, and declining return on investment (ROI) for advertisers and stakeholders.

Revenue Is Plummeting

Before Musk took over, Twitter generated about $5.1 billion in revenue in 2021. By 2023, that number had fallen to $3.4 billion. Projections for 2024 suggest it may dip below $2 billion. The decline in revenue has been a major hit to X’s overall profitability and investor confidence.

A significant factor in this drop is the loss of advertising dollars. In 2021, advertising made up 89% of Twitter’s revenue. Since Musk’s takeover, advertisers have been pulling back, leading to at least a 55% drop in monthly U.S. ad revenue year-over-year. Major brands, including Apple, Amazon, and Disney, have cut their spending due to concerns about content moderation and brand safety.

Advertisers See Less ROI

For advertisers, the return on investment (ROI) for campaigns on X has become increasingly uncertain. A decline in active users means fewer eyeballs on ads. The rise of controversial content has made X a riskier place for brand exposure.

Ad placements on X are not performing as well as they once did. Reports indicate that user engagement with ads has decreased, making it harder for companies to justify spending on the platform. The result? Lower ad revenue for X and diminishing ROI for advertisers.

User Engagement and Active Users Falling

It’s not just advertisers who are leaving—users are too. In the U.S., monthly active users on iOS and Android dropped by 7.9% year-over-year, hitting 70.4 million in September 2024. In the UK, the drop was even sharper, at 17.4%. A declining user base means fewer opportunities for monetization, further cutting into X’s bottom line.

Musk’s push for paid verification (charging users for blue checkmarks) was meant to create a new revenue stream. Instead, it led to confusion, impersonations, and backlash, which may have driven even more users away.

Company Valuation Is Down

X’s overall valuation has taken a serious hit. Fidelity, one of X’s investors, estimates the company’s worth has dropped 72% from its acquisition price. That means the $44 billion investment is now worth closer to $12 billion. Investors who backed Musk’s purchase are seeing diminishing returns, and X’s financial future looks uncertain.

Musk’s New Strategies: Can They Boost ROI?

To counter these challenges, Musk is experimenting with new ways to boost revenue and ROI. One key initiative is turning X into a payments platform, allowing users to send money to each other via Visa-linked accounts. If successful, this could open up new income streams.

Musk has also hinted at using AI-driven features to increase engagement. However, these efforts may take time to yield results, and X is running out of time.

Is There a Path to Profitability?

Right now, X is facing serious financial and operational challenges. Advertisers are skeptical. Users are leaving. Investors are worried about their ROI. The company’s ability to rebound will depend on whether Musk can restore trust and find a sustainable business model.

For now, the numbers speak for themselves: X is struggling, and its return on investment remains highly uncertain.