Advertising declines, subscription transformation: Social platform X's revenue drops quarter-on-quarter in Q2
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Compared to before it was privatized, the business scale of Elon Musk's social platform X has shrunk significantly.
According to a Bloomberg report on Saturday, the latest data disclosed to private equity investors shows that for the second quarter of 2025 (ending June 30), X's revenue is about $707 million, up more than 20% year-on-year, down 2.2% quarter-on-quarter, but has plunged 40% compared to the same period in 2022 (its last financial report as a public company).
The structural decline of the advertising business is forcing this social media giant to completely shift towards subscription services and data licensing, providing "fuel" for the AI large language model of its sister company xAI, which has become its most core narrative for the future.
Advertising Business Shrinks and Strategic Shift
For platform X, advertising used to be its lifeblood, but now, this traditional growth engine has clearly given way to subscriptions and data licensing in X’s strategic landscape.
In July this year, veteran executive and CEO Linda Yaccarino, who was highly experienced in the advertising business, resigned—this was widely seen as a clear sign that X is accelerating its pivot to becoming a data source for artificial intelligence (AI) training, shifting its strategic focus to supporting Musk’s other company xAI’s chatbot Grok.
The fluctuation in revenue data also confirms the pains of this transition period. While Q2 revenue benefited from the election and post-campaign activities, growing over 20% year-on-year for 2024, analysts believe this surge is on weak footing.
After Trump’s victory, Musk briefly had a close relationship with him, which attracted some advertisers to increase spending to curry favor with the new government. However, as the two publicly fell out and Musk announced his withdrawal from politics, these "political dividends" quickly dissipated.
Amid severe transitional pains, X’s profitability has also shown fluctuations.
Data shows that in the second quarter of this year, its gross profit fell 24% quarter-on-quarter, though it still grew by more than 30% year-on-year. At the same time, the company’s adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) was approximately $360 million, also slightly down from earlier in the year, but up 33% compared to the same period last year.
In addition, informed sources say that because last year’s financial indicators involved complicated adjustments, the information disclosed to investors was limited, casting a shadow over the accuracy of assessing its financial health.
Balance Sheet: Cash Reserves Strengthen, Debt Remains a Burden
Despite pressure on revenue, X’s overall business has begun to show signs of stabilization after the turbulence following the acquisition.
A positive signal is its significantly enhanced cash reserves—the cash on its balance sheet has increased from about $244 million at the end of 2024 to nearly $1 billion.
This is mainly due to a recent round of equity financing in which Musk and other investors injected a total of $900 million, stabilizing X’s valuation at around $44 billion, roughly equal to the 2022 acquisition price.
However, on the other side of the scale is the weighty debt burden. The roughly $12 billion in debt incurred from Musk’s acquisition of Twitter remains a huge burden for the company to this day.
Although X refinanced a $1.23 billion loan earlier this year to reduce costs, hefty debt servicing payments still persist.
AI Injects New Narrative, Imagination Coexists with Risk
With traditional business under pressure, Musk is searching for a new, more imaginative capital story for X, with xAI at the center of it.
Earlier this year, X merged with xAI, with X holding an 11% stake. As xAI recently completed another round of financing at a valuation of up to $200 billion, the value of X’s stake in xAI may have already doubled, becoming a highly imaginative off-balance-sheet asset.
It’s worth noting that this is also a key part of Musk’s “empire synergy” strategy. His rocket company SpaceX has already invested in xAI, and Tesla shareholders will vote in November on whether to follow suit.
But behind the high expected returns lies equally high risk. According to media reports, xAI is spending aggressively on infrastructure such as data centers and chips, losing money at a rate of $1 billion per month.
For X, this means its future is no longer determined solely by its social media business but is closely linked to a high-risk, high-investment AI gamble.
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