More advertisers are likely to flee Elon Musk’s social-media company X after the billionaire lashed out at some of the biggest names in the media industry at a New York Times DealBook event for dropping out of the platform, analysts said on Thursday.
Walt Disney and Warner Bros. Discovery suspended advertising on X earlier this month following Musk’s endorsement of a post that falsely claimed members of the Jewish community were stoking hatred against white people.
After apologizing for his post at the event on Wednesday, Musk unleashed a profanity-laced tirade against some of the advertisers for fleeing the platform.
The Tesla chief also acknowledged that an extended boycott by advertisers could bankrupt X, formerly Twitter, but suggested that the public would blame the brands and not him for a potential collapse.
However, Insider Intelligence analyst Jasmine Enberg said, “If anyone is killing X, it’s Elon Musk – not advertisers.”
“Should X collapse, an autopsy would reveal a series of platform policy decisions, staffing cuts, tweets and antagonistic comments by Musk that have driven away X’s primary source of revenue,” Enberg said.
The company has come under fire for lax content moderation, especially from advertisers who do not want their ads appearing next to inappropriate content.
Ad spending on X in the United States from January through October this year declined 64%, compared with the same period in 2022, according to data from media analytics firm Guideline, which tracks advertising spending data from major ad agencies.
“We believe there is a risk that more companies will stop advertising on X; at least on a short-term basis,” D.A. Davidson & Co analyst Tom Forte said.
“It is fair to say this makes the company’s subscription efforts more important and potentially means it may need more than half its revenue to come from subscriptions,” he said.
U.S. monthly active users also declined by about 19% since Musk acquired Twitter last year, according to research firm Data.ai.
Apple, IBM, Sony, Disney, Comcast including NBC Universal, and Paramount collectively accounted for 7% of total U.S. ad spend on X through October this year, Sensor Tower data showed.
If more big brands flee, X will have to depend more on smaller advertisers to bolster revenue, according to Sensor Tower.
“Musk has stated that Twitter is worth a lot lesser than the $44 billion he had paid for it. It is hard to argue that will change quickly if advertisers take deep offence to what he said yesterday,” said Russ Mould, investment director at AJ Bell.
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