Elon Musk took control of Twitter a year ago. As this article in Ars Technica reports, the company has seen a significant drop in advertising revenues and user engagement.

Musk seems to have bought Twitter on a whim, then cut the staff from 7,500 to 1,500, sharply reduced content moderation, changed Twitter’s brand name to X, and welcomed the return of misinformation and conspiracy theorists.

Here are a few tidbits from the article:

One year after Elon Musk’s $44 billion purchase of Twitter, which he completed on October 27, 2022, after months of legal drama, the social media firm that Musk renamed “X” is on shaky financial ground.

Musk has expressed ambitions to transform X into an “everything app” that includes a digital payments platform and audio and video calling. He told employees that, despite massive cuts eliminating most of Twitter’s pre-Musk workforce, he sees “a clear but difficult path” to a future valuation of more than $250 billion…

X’s August 2023 usage was 91 million hours per day, down 13 percent year over year, according to the Sensor Tower report. X’s August 2023 usage was also down 6 percent since July 2023.

By contrast, Sensor Tower said Facebook’s August 2023 usage was 1.31 billion hours per day, up 10 percent compared to August 2023. Unlike X’s performance from July to August, Facebook usage did not drop month over month, according to Sensor Tower.

On the plus side for X, the Threads app launched in July by Facebook owner Meta doesn’t seem ready to surpass X any time soon, if ever. Threads’ August 2023 usage was 500,000 hours per day, down 62 percent month over month, according to Sensor Tower.

X’s daily active users were down 9 percent in August 2023 when compared to August 2022, according to Sensor Tower. It was the ninth consecutive month of year-over-year declines in that statistic.

Similarweb, another research firm, reported last week that usage is “down by every measure” in the year since Musk bought Twitter.

“In September, global web traffic to twitter.com was down 14 percent year-over-year, and traffic to the ads.twitter.com portal for advertisers was down 16.5 percent,” Similarweb wrote. “In the US, where about a quarter of twitter.com’s web traffic originates, September traffic was down 19 percent. The trend was similar, if not quite as pronounced in other countries: -11.6 percent in the UK, -13.4 percent in France, -17.9 percent in Germany, and -17.5 percent in Australia…”

The drops in daily users and usage seem to have been dwarfed by declines in advertising, the company’s primary source of cash despite Musk’s attempts to boost subscription revenue. Advertising problems have likely helped lower X’s overall value, which Fidelity estimated in April at $15 billion—a third of what Musk paid…

Business Insider reported this week that an “overwhelming majority of the world’s biggest-spending advertisers have stopped advertising on X following Elon Musk’s acquisition of the company.” The report cited data from Ebiquity, a marketing consulting firm that works with 70 of the top 100 top-spending advertisers. Ebiquity “said that just two of its clients had purchased ads on X last month,” down from 31 brands in September 2022.

X’s US monthly ad revenue was down at least 55 percent year over year every month since Musk took over, according to data from analytics firm Guideline that was cited in a Reuters article. The biggest drop was 78 percent in December 2022. The year-over-year decline was 60 percent in August 2023, the last month data was available….

X Premium (formerly Twitter Blue), which comes with a blue checkmark and other features, costs $8 a month. Musk said last week that two new tiers will launch soon: “One is lower cost with all features, but no reduction in ads, and the other is more expensive, but has no ads,” he wrote. X has also been testing a $1 annual fee that new users would have to pay to access basic features.

So far, subscription revenue doesn’t seem to be meeting Musk’s lofty goals. As Bloomberg wrote this week, an “analysis from independent researcher Travis Brown estimates that 950,000 to 1.2 million people now pay for X’s $8 monthly premium service.” That amounts to less than 1 percent of users and no more than $120 million in annual revenue, not including app store fees from people who subscribe through Apple or Google.

“This is hardly a replacement for the ad revenue that Twitter relied on in the pre-Musk era—about $4.5 billion in its last full year as a public company,” Bloomberg wrote. “Meanwhile, many of X’s top advertisers, such as Mondelez International, Coca-Cola, IBM, and HBO, are spending less than they were before Musk took over, largely because of policies he’s implemented that have made the service more chaotic and unpredictable.”

Bloomberg quoted Sensor Tower research indicating that “X’s top five advertisers are [collectively] spending 67 percent less on ads than they did before the acquisition,” adding that “some large ad agencies have said they don’t plan to spend money on X at all.”

A chaotic first year

X’s finances are further complicated by an estimated $1.5 billion in annual interest payments stemming from the $13 billion in debt Musk used to fund the takeover. That debt hasn’t worked out for the seven banks that lent Musk $13 billion, which “currently expect to take a hit of at least 15 percent, or roughly $2 billion, when they sell the debt,” a Wall Street Journal report said.

“Bankers close to the deal say that Musk’s capricious management and a weakening advertising market could point to a junk-bond rating, a designation reserved for companies at higher risk of defaulting,” the report said.

Musk has apparently tried to save money by stiffing vendors and landlords, causing dozens of companies to sue X for unpaid bills. Given the costs of litigation and settlements, it’s not clear whether this strategy will save Musk money in the long run.

A chaotic first year indeed.