In a viral moment caught on camera, social media platform owner Elon Musk told advertisers, specifically the companies that are suspending ads on Twitter, now known as X, to "go f*** yourself."
Musk’s statement may not win advertisers back and could have the social media platform struggling more into the future.
What Happened: While speaking at the New York Times DealBook Summit, Musk was asked about the companies that have been boycotting Twitter and suspending their advertisements after the billionaire interacted with an antisemitic conspiracy post on the platform.
Musk apologized for interacting with the post, calling it "one of the most foolish" things he's done on the platform.
Speaking about the companies that have been suspending advertising on Twitter, Musk said they are blackmailing the platform and attempting to silence him.
"I don't want them to advertise," Musk said. "If someone is going to blackmail me with advertising, go f*** yourself. Go. F***. Yourself. Is that clear?"
After his comments, Musk singled out Walt Disney Company DIS CEO Bob Iger, who had spoken out about pulling advertising at the same event previously in the day.
"Hey Bob, if you're in the audience."
The comments from Musk have drawn mixed reactions from the platform’s users and investors. Some believe the statement could push more advertisers away and keep advertisers from returning, which could be a big financial blow to the company.
"What this advertising boycott is going to do is, it's going to kill the company," Musk acknowledged.
Along with Disney, other companies that have paused or suspended advertisements on Twitter include Warner Bros. Discovery WBD, International Business Machines IBM, Apple Inc AAPL, Amazon.com Inc AMZN Coca-Cola Company KO and Microsoft Corporation MSFT.
Since Musk interacted with the post, over 100 companies have paused advertisements, according to a review by The New York Times.
Related Link: ‘Really?’ Tesla Bull Gary Black Advises Elon Musk To Sell X To ‘Another Media Entity’ Instead Of Flipping Advertisers Off
Why It's Important: The financial well-being of Twitter heavily relies on advertising revenue, and the impact of company boycotts could play a crucial role in shaping the company’s future success.
Benzinga recently shared that estimates say Twitter could lose up to $75 million in 2023 from the advertisers pulling their content from the platform in the recent months.
Musk took Twitter private in a $44 billion acquisition in 2022, which makes most of the company's financials harder to project, including the impact of advertising revenue.
For the last three months of 2021, Twitter reported $1.57 billion in revenue. Of that total, 90% of revenue came from advertising.
Estimates say advertising revenue has fallen year-over-year each month since the acquisition.
Apart from the advertising revenue, Twitter collects subscription fees with some users paying $8 per month for a premium subscription. A recent estimate showed that less than 1% of the Twitter user base pays for the upgraded subscription, which could make annual revenue for subscriptions come in at less than $120 million.
In November 2022, a report from NPR suggested Twitter could be better off by declaring bankruptcy. When taking Twitter private, the social media company had additional debt added on totaling $13 billion. The debt total is around seven times estimated earnings for 2022, a high figure for a company of Twitter's size, according to the report.
NPR estimated that Twitter would have around $1 billion in annual debt payments and would have cash flow of $632 million in 2022.
Since the acquisition of Twitter, several investors including Fidelity have lowered their valuation for the holding value of the company. Fidelity's latest estimate in September valued Twitter at a 58% discount to its $44 billion acquisition price.
Stock awards for the company's employees in March 2023 were done with Twitter valued at $20 billion, less than half of the takeover price.
Musk has said that Twitter will be valued at $250 billion in the future and could someday top the $1 trillion mark.
Lower valuations for Twitter from the original buyout price could make it harder for existing investors to justify putting more money into the company, making funding a bigger struggle for Musk moving forward.
While Twitter's valuation may rise in the future, the current time period shows that the company may need a new source of revenue or a new plan to win back advertisers who help pay the bills.
Read Next: 52 Facts And Figures About Elon Musk
Photo: Shutterstock
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.
