X Lender Diameter Says Platform More Profitable Than Market Saw

Diameter Capital Partners, a firm that acquired X's debt, believes that the social media company's profitability is better than what the market perceives. According to Jonathan Levinsohn, a co-founder of Diameter Capital Partners, they worked from the outside, tracking advertising data and other information from external sources to develop their own estimate of X's revenue. Levinsohn stated that they had a feeling that X's profitability might be better than what people thought. This perspective is supported by the fact that X's debt was trading at 99.56 dollars on Tuesday, according to data collected by Bloomberg. Additionally, the inclusion of xAI, a startup focused on artificial intelligence by Elon Musk, was an important part of the deal for Diameter. Levinsohn mentioned that they were excited about the investment in xAI, which is a significant asset for X.



Elon Musk and Linda Yaccarino have implemented several strategic moves to improve X's financial performance. Some of these moves include:

1. Cost-cutting measures: Elon Musk significantly reduced X's staff from 8,000 to about 1,500 employees, which helped to cut costs and improve the company's financial situation (Yaccarino, Code Conference, 2023).
2. Advertiser return: Yaccarino mentioned that 90% of the top 100 advertisers have returned to the platform in the last twelve weeks, indicating a recovery in advertising revenue (Yaccarino, Code Conference, 2023). This is a positive sign for X's financial prospects, as advertising is a significant revenue stream for the company.
3. Improved user engagement: According to Yaccarino, X's usage is at an all-time high, with more than 540 million global users. The key metrics around time spent on X are "trending very, very positively" (Yaccarino, Code Conference, 2023). This increase in user engagement can lead to higher advertising revenue and improved financial performance.

These strategic moves have been received positively by investors and users:

1. Investor confidence: Yaccarino's confident statement that X is poised to turn a profit by early 2024 has likely boosted investor confidence in the company's financial outlook (Yaccarino, Code Conference, 2023).
2. User satisfaction: The return of advertisers and improved user engagement suggest that users are satisfied with the changes made by Musk and Yaccarino. The increase in user engagement may also indicate that users appreciate the new features and improvements implemented by the company.

However, X still faces challenges, such as unpaid severance to laid-off employees, lawsuits related to unpaid rent, and controversies related to content on its platform. These issues may impact the company's reputation and financial performance in the long run.

The return of advertisers to X has significantly impacted its revenue streams and overall profitability. According to Linda Yaccarino, X's CEO, 90% of the top 100 advertisers have returned to the platform in the last twelve weeks. This is a crucial indicator of X's resurgence, as advertisers had previously abandoned the platform due to concerns about content moderation policies and the potential for their ads to appear next to sensitive content. The return of these advertisers has likely contributed to an increase in X's advertising revenue, which is one of its primary revenue streams.

However, the road to profitability has not been without challenges for X. The company has faced controversies related to content on its platform, including antisemitic content, which may have contributed to the initial exodus of advertisers. Additionally, Elon Musk's public spat with the Anti-Defamation League (ADL) over a steep drop in ad revenue due to the ADL's actions has further muddied the waters. These issues may continue to influence advertisers' decisions to support X, and the company will need to address them effectively to maintain their continued support.

In terms of factors that may influence advertisers' continued support, X's ability to maintain a safe and respectful environment for users and advertisers alike will be crucial. This includes effective content moderation policies and a commitment to addressing any concerns or issues that arise. Additionally, X's financial performance and the value it can provide to advertisers through its platform will be important factors in their decision to continue supporting the company. As X continues to work towards profitability, it will be essential to monitor these factors and address any challenges that may arise to maintain the support of its advertisers.