Elon Musk Says X is ‘Barely Breaking Even’ in Email to Employees

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Elon Musk, the owner of X (formerly Twitter), has shared a hard and strenuous reality with his current employees. In a latest email, as disclosed by PCMag, Musk admitted and confessed that the company is facing struggles financially and is “barely breaking even.” In clear words, it basically means that the platform is just managing to cover its expenses, without any profit. Musk pointed out two major reasons for this downfall. He mentions that slow and gradual growth in new users and disappointing revenue are the main cause for this situation.

Since Musk took over X in the year 2022, the platform has undergone some major changes. While some of these changes were courageous, confident and visionary, it also created major challenges such as losing advertisers, rapid increase in debt, and even facing a much slower user growth. Now, X is at a crucial turning point, and Musk’s leadership will be critical in reforming and shaping its future.

A Mountain of Debt

One of the greatest difficulties which X is currently facing is the large amount of debt it is carrying in today’s time. When Musk purchased Twitter for $44 billion, he did not make the payment all by himself. To pay the full amount, he got a loan of $13 billion from banks like Morgan Stanley, Bank of America, and Barclays. This decision was able to help him in closing the deal but it also came with notable financial risks.

The borrowed money from the banks often comes with high interest payments which is more than $1 billion every year. These payments usually put pressure on X to produce sufficient  amount of money in order to stay financially secure and stable. To minimize their risk, the banks that financed the deal are now trying to sell certain portions of the debt to other buyers. Reports mentions that they are offering these debts at discounted rates which is as low as 90–95 cents on the dollar, which evidently shows how unsure the investors are about X’s ability to repay the dept.

Advertisers Are Leaving

A major part of X’s struggles usually comes from advertisers that are stepping back or withdrawing. The main way through which the platform is able to make money is Advertising. But now many businesses have finally decided to stop running ads on X since Musk took over. PCMag highlights that advertisers have been extremely cautious and careful due to Musk’s changes to the company and his controversial and problematic posts.

One big issue is Musk’s choice to terminate many of his employees, including those who filtered, regulated and moderated content. The main function of these teams was to keep the platform safe for users and advertisers. Without them, the platform is now more dangerous and speculative for brands. Businesses worry that their ads might appear next to inappropriate or controversial content, which could potentially harm their image. Not only these, but Musk’s own behaviour has also made the ongoing issue worse. Some of his posts on X have caused major controversy which eventually makes the advertiser to think even more carefully. Now the scenario is such that only few businesses are willing to advertise on this platform, thus X’s income has dropped tremendously.

User Growth Has Slowed

Another alarming issue is that fewer people are joining X. User growth has slowed down rapidly, which means that only fewer people are using the platform and engaging with posts, videos, and ads. This decline in their user activity makes it a tough challenge for the platform to attract advertisers and earn money.

In order to fix this, Musk has now introduced new features which is created and designed to bring in more users and also to focus on new ways to earn revenue. These features include job postings and a video section to compete with other platforms like LinkedIn and YouTube. While these ideas generally tend to show potential, yet they have not made any major difference to solve X’s financial issues.

Challenges Around the World

X’s struggles are not only limited to the U.S. The platform has also been facing challenges in global markets, specifically in countries outside of North America. In many of these regions, advertisers are doubtful to spend money on ads since user growth has been slow. These additional global issues are adding to the financial challenges that X is currently facing.

Musk’s Big Dreams for X

Regardless of all these issues, Musk has a clear, bold and a confident vision for X. He does not see X as just a social media platform. Instead, he wishes to turn it into a one-stop destination for everything people that people might need online. Musk visualizes a platform where users can easily chat with friends, shop online, watch videos, and even pay bills or can transfer money.

This ambitious plan is part of Musk’s long-term goal to make X more than just a place for posts and tweets. He believes that this platform can become the most important tool in people’s daily lives. Musk has also set a timeline to achieve this goal by the end of 2024.

In his email, Musk also spoke about X’s power to shape important conversations globally. He believes the platform is capable of having much more potential than it has today.

A Clear Warning to Employees

In his email, Musk did not intend to hide the seriousness of the situation.  In the email, he elaborated and described the company’s condition as “very dire,” meaning it is in some real trouble.  Additionally, Musk also gave warning to his employees to work harder and to help the platform to recover at a faster pace. His message was direct and clear: without any quick and decisive action, the company could face even bigger major challenges.

This level of honesty shows us how serious the actual situation is. Musk has always been known for his demanding and authoritative leadership style, and this email indicates his urgent approach to tackling problems.

What’s Next for X?

The future of X is unsure and unstable, but with all these issues currently going on it’s crystal clear that the company needs to take immediate action. To recover with this trauma, X must focus on three major goals i.e. they must focus on bringing the advertisers back, attracting more users, and even they need to come up with new ways to make money. Each of these challenges is tough on its own, but together, they can create a positive ambience for the platform.

The banks’ decision to sell parts of the company’s debt highlights the fact that how urgent and critical it is for X to improve its financial situation. At the same time, Musk’s dream of turning X into a multi-purpose platform for communication, shopping, and financial services could either save the company or prove to be too ambitious considering the current scenario and situation.

A Lesson for Everyone

The story of X shows us that even the biggest companies with the most famous leaders can face serious issues. Success is never a guarantee and should never been taken for granted at all cost. We must also note that bold decisions come with their own sets of risk and it’s up to us how patiently we handle and tackle the issues.  However, Musk’s determination to reform and rebuild X also teaches us the importance of determination and creative thinking.

As X tries to rebuild and reform, the world is watching. No one knows if Musk will turn things around, but one thing is for sure: X’s story is not over yet. Right now, the platform is at a turning point, and only time will show whether Musk’s big plans will bring success or challenges.