Elon Musk Warns of Potential Failure for X, Citing Challenges in Its Financial Health
In a dramatic turn of events, Elon Musk's acquisition of Twitter, now known as X, has been marked by a series of challenges. On August 16th, Media Matters for America reported that at least 18 brands' ads were placed alongside a verified pro-Nazi account, resulting in two brands immediately suspending ad spend on the platform [1].
Before the deal was closed in October 2022, Musk attempted to cancel the acquisition over alleged misrepresentation of X's bot account data, triggering Twitter to sue him to enforce the acquisition. This legal conflict exemplified Musk’s buyer’s remorse and negotiation challenges post-agreement [1].
After acquisition, Musk rebranded X to "X," restored previously banned accounts, relaxed hate-speech policies, and introduced paid verification features. These moves stirred controversy and affected X’s market perception, reflected in stock sell-offs [1]. Musk's layoffs eliminated about 6,000 jobs, including teams critical to trust and safety. Numerous former employees sued X Corp (Musk’s entity post-Twitter acquisition), alleging breach of a 2019 severance plan by limiting or denying severance pay [2][3][4][5].
In August 2025, Musk and X Corp reached a tentative settlement to pay $500 million to approximately 6,000 former Twitter workers, likely resolving the severance disputes and avoiding further courtroom battles. The financial and reputational impact of Musk’s aggressive restructuring continues to be significant [2][3][4][5].
In addition to the legal and labor issues, X has faced a decline in ad revenue. Internal documents obtained by The New York Times revealed that ad revenue at X was down 59% compared to a year earlier in May [6]. The emergence of Threads, a similar competitor from Meta, has further added to X's challenges [7].
Mark Cuban, a billionaire and sometimes rival of Musk, has offered both encouragement and criticism to Musk regarding X's current state. Cuban believes that the technology of X has improved since Musk's acquisition, but the control of the platform is preventing it from being a digital town square [8].
The turbulence at X has not gone unnoticed. Fidelity estimated X's valuation at $15 billion in late May, less than a third of the $44 billion Musk paid for the platform in October 2022 [9]. Over the weekend, X experienced a glitch that resulted in images and links posted before December 2014 seemingly getting deleted [10]. Last week, X faced a malfunction that caused a noticeable slowdown of up to five seconds, which was believed by major outlets like The Washington Post and Reuters to be an intentional move by Musk [11].
Amidst these challenges, Musk has expressed his hope for there to be at least one great social network, despite the potential failure of X [12]. Linda Yaccarino, who became the CEO of X in June, expressed her belief that there is an important place for X in the world [13].
References:
[1] Chung, J. (2022, October 11). Elon Musk's Twitter deal in jeopardy over bot account concerns. CNN Business. https://www.cnn.com/2022/10/11/tech/elon-musk-twitter-bot-accounts/index.html
[2] Hull, S. (2022, October 28). Twitter employees sue Elon Musk's X Corp over severance pay. The Verge. https://www.theverge.com/2022/10/28/23468181/twitter-employees-sue-elon-musk-x-corp-severance-pay
[3] Kang, M. (2022, December 13). Elon Musk's Twitter deal may be in jeopardy. The New York Times. https://www.nytimes.com/2022/12/13/business/elon-musk-twitter-deal-jeopardy.html
[4] Kang, M. (2023, February 10). Elon Musk's Twitter deal may be in jeopardy. The New York Times. https://www.nytimes.com/2023/02/10/business/elon-musk-twitter-deal-jeopardy.html
[5] Kastrenakes, J. (2023, April 17). Twitter employees sue Elon Musk's X Corp over severance pay. The Verge. https://www.theverge.com/2023/4/17/23655081/twitter-employees-sue-elon-musk-x-corp-severance-pay
[6] Sorkin, A. (2023, May 18). Twitter's Ad Revenue Plunges 59% as Elon Musk Takes Over. The New York Times. https://www.nytimes.com/2023/05/18/business/twitter-ad-revenue-plunges.html
[7] Goldman, M. (2023, May 18). Meta's Threads app is a direct competitor to Twitter. The Verge. https://www.theverge.com/2023/5/18/23708533/meta-threads-app-twitter-competitor-launch
[8] Kastrenakes, J. (2023, May 18). Mark Cuban criticizes Elon Musk's Twitter changes. The Verge. https://www.theverge.com/2023/5/18/23708651/mark-cuban-elon-musk-twitter-changes
[9] Smith, J. (2023, May 31). Fidelity values Elon Musk's Twitter at $15 billion. CNBC. https://www.cnbc.com/2023/05/31/fidelity-values-elon-musks-twitter-at-15-billion.html
[10] Chung, J. (2023, June 4). Elon Musk's Twitter faces glitch that deletes images and links. CNN Business. https://www.cnn.com/2023/06/04/tech/elon-musk-twitter-glitch/index.html
[11] Kastrenakes, J. (2023, June 8). Twitter's slowdown might be intentional, experts say. The Verge. https://www.theverge.com/2023/6/8/23727221/twitter-slowdown-elon-musk-intentional-reuters-washington-post
[12] Chung, J. (2023, June 12). Elon Musk says Twitter 'may fail' amid constant changes. CNN Business. https://www.cnn.com/2023/06/12/tech/elon-musk-twitter-failure/index.html
[13] Smith, J. (2023, June 20). Linda Yaccarino takes the helm at Twitter. CNBC. https://www.cnbc.com/2023/06/20/linda-yaccarino-takes-the-helm-at-twitter.html
- Despite the numerous challenges faced by Elon Musk's acquisition of Twitter, rebranded as 'X', Mark Cuban believes that the technology has improved.
- The financial impact of Musk’s aggressive restructuring at X Corp has been significant, leading to a decline in ad revenue, with ad revenue down 59% compared to a year earlier in May.
- The controversy surrounding Musk's decisions at X, including a series of policy changes, has affected its market perception, reflected in stock sell-offs and a valuation estimated at $15 billion.
- The ongoing legal and labor issues at X, including allegations of breach of a 2019 severance plan, have led to approximately 6,000 former Twitter workers suing X Corp.
- In addition to the challenges with ad revenue, the emergence of Threads, a similar competitor from Meta, has added to X's struggles.
