By now, you’ve probably heard about Elon Musk’s grand plan to turn X, the social media platform formerly known as Twitter, into an “everything app.” One of the major pillars of Musk’s reimagining of X includes a payment platform much like PayPal or Venmo.
New documents obtained by Bloomberg shed new light, not only into Musk’s financial service vision for X, but also into just how much the company has struggled financially since he acquired it in October 2022.
These new documents are prepared by X and have been submitted to state regulators as Musk’s company looks to receive money transmitter licenses — a requirement for anyone looking to provide financial services of this kind. These documents also give the public its first official peek into the company since Musk took X private.
X’s revenue has plunged
Now that X is no longer publicly traded, there’s a lot we no longer know about the company. Most reports regarding X’s revenue troubles, for example, have come from internal leaks.
However, these new documents make it official: According to X, the company’s revenue has plummeted since Musk took over.
In the first six months of 2023 — the first full year in which Musk controlled the company — X’s revenue fell by nearly 40 percent from the same period the prior year. The company brought in $1.48 billion during that time period. Furthermore, X lost $456 million in the first quarter of 2023.
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The majority of this drop in revenue can be attributed to X’s advertiser woes. Prior to Musk’s takeover, when the platform was known as Twitter, advertising generally accounted for a whopping 90 percent of the company’s revenue. Under Musk, advertisers fled due to platform changes and various controversies involving its owner, so ad revenue declined.
Musk’s financial services push
X is looking to launch a payment services system on its social media platform. The company submitted documents to 11 states as it seeks to obtain money transmitter licenses.
The company is looking to provide users with a PayPal/Venmo-like feature called X Payments. The plan is to allow users to pay other users, buy products and services, and store money via their X account.
Musk has floated a number of ideas to make up for the loss of advertising revenue. For example, X rolled out the X Premium subscription plan as well as a subscription service for creators. Neither service has been able to close the revenue gap left by the advertiser exodus.
However, according to these documents, X plans to utilize the X Payments service mainly in order to achieve “increased participation and engagement” on the social media platform. X Payments does not plan to charge fees for most of its services.
The X Payments idea has been brought up by Musk before. In previous comments, Musk shared that he’d like users to be able to open a savings account with X with “extremely high yield.”
According to Bloomberg, then-Twitter had actually incorporated a payments business in February 2022, before Musk bought the platform. Now called X Payments, the X subsidiary has its own board of directors and management team. While X currently has business relations with payment processors, like Stripe and Adyen, and banks with Citibank, it’s unclear if X would be partnering with these companies for X Payments’ services.
And, bad news for cryptocurrency advocates. According to the report, X Payments has no current plans to incorporate virtual currencies like crypto into the business.