SpaceX's Earnings Show Elon Wiped Out Two-Thirds Of Twitter's Ad Business

As I scrolled through the latest earnings report from SpaceX, one figure jumped out at me: $713 million. That's the amount of ad revenue Twitter lost over the past four years, according to the company's own financials. And it's a staggering decline, one that raises questions about the future of Elon Musk's X platform. The billionaire entrepreneur had promised investors that he would nearly triple Twitter's ad revenue, but the numbers tell a different story.

When Elon Musk bought Twitter in 2022, he made big promises about its potential. In an effort to convince investors to back his takeover, he forecast that the platform's ad revenue would jump from $4.5 billion in 2021 to $12 billion by 2027. It was a bold claim, one that many saw as reasonable at the time. But now, with SpaceX's latest earnings report, it's clear that Musk's predictions were wildly off the mark.

In the second quarter of 2022, Twitter brought in $1.08 billion in ad revenue. Just four years later, in the second quarter of 2026, X's ad revenue had plummeted to $367 million. That's a decline of $713 million, a staggering 66% drop in ad revenue over the past four years. It's a decline that's not just significant, but also inexplicable, given the efforts of Musk and his team to revamp the platform's ad technology.

According to the earnings report, the decline in ad revenue is due to the transition to a new advertising platform. However, this explanation is contradicted by the company's own CFO, Bret Johnsen, who credited the new platform with a slight quarter-over-quarter uptick in ad revenue on an analyst call. It's a curious explanation, one that raises questions about the effectiveness of the new platform and the competence of the team behind it.

The decline in ad revenue has significant consequences for X's business model. With ad revenue plummeting, the company is likely to struggle to generate the revenue it needs to survive. It's a problem that Musk and his team will need to address quickly, or risk seeing the platform's user base and revenue decline further.

The decline in Twitter's ad revenue is a billion-dollar lesson in the importance of understanding the underlying economics of a business. When Musk bought Twitter, he failed to appreciate the complexities of the platform's ad business, and his promises to investors were based on a flawed understanding of the market. The consequences of this failure are now clear, and it's a lesson that Musk and his team would do well to remember.

The future of X is uncertain, but one thing is clear: the platform's ad business is in trouble. With ad revenue plummeting and the company's business model under strain, it's a challenge that Musk and his team will need to address quickly if they want to avoid a catastrophic decline in user base and revenue.