Elon Musk’s ambitious plan to transform X, formerly known as Twitter, into an all-encompassing social media platform is starting to take shape. One of the key components of Musk’s vision is a payment platform similar to PayPal or Venmo. New documents obtained by Bloomberg shed light on Musk’s financial service plans for X and reveal the financial struggles the company has faced since he acquired it in October 2022.
The documents, prepared by X and submitted to state regulators, provide the public with its first official look into the company since it went private. They also confirm what was previously reported through internal leaks – X’s revenue has plummeted under Musk’s leadership. In the first six months of 2023, the company’s revenue fell by nearly 40 percent compared to the same period the previous year, bringing in $1.48 billion. Additionally, X reported a loss of $456 million in the first quarter of 2023.
The significant drop in revenue can be attributed to X’s advertiser woes. Prior to Musk taking over, advertising accounted for 90 percent of the company’s revenue. However, advertisers fled due to changes in the platform and controversies surrounding its owner, causing ad revenue to decline.
To offset the loss of advertising revenue, X is now focusing on its payment services system. The company has submitted documents to 11 states to obtain money transmitter licenses. The planned feature, called X Payments, aims to provide users with a PayPal/Venmo-like experience where they can pay other users, purchase products and services, and store money within their X account.
The documents reveal that X intends to use X Payments to drive “increased participation and engagement” on the social media platform. Unlike traditional payment platforms, X Payments does not plan to charge fees for most of its services. Musk has previously expressed his desire for users to be able to open high-yield savings accounts with X.
Interestingly, X had already incorporated a payments business known as X Payments before Musk acquired the platform. The subsidiary has its own board of directors and management team. While X currently has business relationships with payment processors like Stripe and Adyen, as well as banks like Citibank, it remains unclear if these companies will be partnering with X for its payment services.
Unfortunately for cryptocurrency enthusiasts, X Payments does not have any plans to incorporate virtual currencies like crypto into its business model at this time. This decision may come as a disappointment to those hoping for X to embrace the growing trend of digital currencies.
In conclusion, the newly obtained documents provide valuable insights into Elon Musk’s plan to revamp X into an “everything app” and shed light on the company’s financial struggles. With the launch of X Payments, Musk aims to drive engagement on the platform and make up for the loss of advertising revenue. While the exact details of the payment service are still unclear, it is clear that X is pivoting towards becoming a comprehensive social media and financial services platform under Musk’s leadership.
