How X Actually Makes Money — And Why a $44 Billion Bet Still Hasn’t Paid Off
When Elon Musk bought Twitter for $44 billion in October 2022, he promised to turn it into an “everything app.” Three years later, X has been swallowed first by his AI company xAI, then folded into SpaceX in a deal valuing the combined entity at $1.25 trillion. The platform’s revenue has nearly halved from its peak, fewer than 2 million people pay for a subscription, and Musk himself has admitted the numbers are “unimpressive.” So how does this platform actually make money — and is it worth more or less than what he paid?
The revenue decline, year by year
The trajectory tells the story plainly. In 2021, Twitter’s last full year as an independent public company, it generated $5.1 billion in revenue. In 2022, the year Musk completed his takeover, the company brought in $4.4 billion. Then the slide began.
In 2023, Musk’s first full year running the platform, revenue fell to approximately $3.4 billion — a decline of more than 20%. The following year was worse. In 2024, total revenue dropped to roughly $2.5 billion, a further 13.7% decline. The culprit was an advertiser exodus triggered by Musk’s gutting of content moderation teams, his public feuds with brands, and the moment at a DealBook conference when he told departing advertisers to “go f— yourself.”
There was a partial recovery in 2025. X posted $752 million in revenue in the third quarter alone, a 17% year-on-year increase, and closed out the year at around $2.9 billion in total revenue. That marked its first year of growth since the takeover. But even that improved figure is still 35% below what Twitter generated in its final pre-Musk year.
Even Musk acknowledged the reality. In January 2025, he stated publicly that “user growth is stagnant, revenue is unimpressive, and we’re barely breaking even.”
Where the money actually comes from
X’s income breaks down into three streams, and the proportions expose the fundamental business model problem Musk has failed to solve.
Advertising is still the backbone. Around 68% of X’s total revenue comes from ads — promoted posts, video campaigns, and targeted placements. Global ad revenue for 2025 came in at approximately $2.26 billion. While some major advertisers returned after Trump’s election victory — seen partly as a gesture of goodwill toward Musk, who played a central role in the campaign — the momentum didn’t hold. Second-quarter 2025 ad revenue dipped 2.2% from the first quarter, suggesting the recovery was fragile. Compared to the ad machines at Meta or TikTok, X remains a minor player in the digital advertising economy.
Subscriptions are a rounding error. X Premium, the three-tier subscription service, generates an estimated $200 million per year. According to analysis by TechCrunch and app intelligence firm AppFigures, X has roughly 1.3 to 2 million paying subscribers across its Basic ($3/month), Premium ($11/month), and Premium+ ($22/month) tiers. That’s fewer than 0.5% of the platform’s claimed user base. Musk’s original business plan — the one he used to attract investors — projected 69 million paying subscribers by 2025 and 159 million by 2028. The actual number misses by a factor of roughly 35.
Data licensing is the quiet third stream. Companies, academic institutions, and developers pay for access to X’s firehose of real-time conversation data. This segment historically brought in $500–600 million annually. Musk has restricted API access and sharply raised prices, which drove away smaller developers but made each remaining enterprise contract more lucrative.
What Musk paid vs. what it’s worth now
Musk acquired Twitter at $54.20 per share — a $44 billion equity deal. He then loaded approximately $12 billion in acquisition debt onto the company, saddling X with more than $1 billion in annual interest payments alone.
The valuation cratered almost immediately. By November 2023, Fidelity — one of the deal’s co-investors — marked down its stake to a valuation of just $5.3 billion. That represented an 88% decline from the purchase price in barely a year.
The rebound, when it came, had less to do with X’s business performance than with Musk’s political capital. After his prominent role in the Trump campaign and appointment to lead the Department of Government Efficiency, investor confidence in Musk’s broader empire lifted X’s perceived value. By early 2025, the platform’s valuation had climbed back toward the $33–44 billion range.
The xAI merger — and why X isn’t really a social media company anymore
In March 2025, Musk’s AI startup xAI acquired X in an all-stock transaction. The deal valued X at $33 billion in equity — or $45 billion enterprise value including the $12 billion debt — and xAI at $80 billion, creating a combined entity worth $113 billion on paper.
This wasn’t a conventional acquisition. Both companies already shared the same owner, overlapping investors from firms like Sequoia and Fidelity, and deeply intertwined operations. xAI’s chatbot Grok was already embedded across X’s interface, and the platform’s billions of posts were already being used to train xAI’s models. The merger formalised what was already happening: X’s primary strategic value is no longer as a social network. It’s as a data pipeline for artificial intelligence.
Then in February 2026, SpaceX acquired xAI in a deal that valued the combined SpaceX-xAI entity at a staggering $1.25 trillion. X is now a subsidiary of a subsidiary — buried within a corporate structure built around rockets and large language models, not social media.
The brutal maths of the subscription bet
X Premium’s three tiers offer features including longer posts (up to 25,000 characters), the blue verification badge, reduced or zero ads, post editing, and access to Grok’s AI features. But with a claimed 600 million monthly active users — a figure disputed by independent analysts, some of whom estimate closer to 388 million — the conversion rate to paying subscribers remains microscopic.
For context, Spotify converts roughly 46% of its users to paid plans. YouTube Premium sits at approximately 5%. X sits below 0.5%. The platform simply hasn’t built a subscription product compelling enough for the vast majority of its users to pay for, and its late-2024 decision to raise Premium+ prices by 30% to $22/month is unlikely to broaden that appeal.
Why X is still powerful — and what its future depends on
Despite the financial turbulence, X retains an outsized influence on public discourse. It remains the default platform for breaking news, political commentary, and real-time events. Whether the monthly active user count is 388 million or 600 million, the platform still draws billions of visits and hosts conversations that shape headlines globally.
But the future of X is no longer about whether it can fix its ad business or grow subscriptions. It’s about three things: how valuable its real-time data is for training AI models, how effectively it serves as a distribution platform for Grok and future xAI products, and whether the long-promised payments infrastructure — “X Money,” repeatedly delayed by regulatory hurdles — ever launches.
The numbers tell the bottom line clearly. Musk paid $44 billion for a company now generating under $3 billion in revenue, carrying $12 billion in debt, with annual interest costs exceeding $1 billion, and a subscription product that missed its targets by an order of magnitude. X’s adjusted EBITDA roughly doubled to $1.25 billion in 2024 compared to Twitter’s 2021 figure — but only because Musk slashed approximately 80% of the workforce, cutting headcount from around 7,500 to fewer than 1,500.
The platform’s value increasingly depends not on what it earns, but on what it feeds. Whether Musk’s sprawling empire can turn real-time human conversation into something worth far more than advertising dollars ever were is the only question that matters now. So far, the market seems to believe it can. The numbers suggest the jury is still very much out.
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