X Holdings Corp., recognized for its recent valuation uplift, faces significant financial challenges. Despite this, the company is ambitiously engaging with investors to restore its $44 billion valuation from 2022, when Musk took over Twitter, rebranding it as X. This endeavor is backed by non-standard financial adjustments and strategic investor engagement.
X Holdings Corp., led by Elon Musk, is navigating through a complex financial landscape to recover its pre-acquisition valuation. The company’s efforts are buoyed by strategic financial presentations that deviate from conventional accounting norms, which have been instrumental in reshaping its market perception.
Bloomberg reports that X Holdings is actively seeking new equity investments, aiming to reclaim its $44 billion valuation — a mark it hit in 2022 during Musk’s acquisition of the platform, then known as Twitter. The company’s efforts have sparked renewed interest, allowing its creditors to sell off more than $11 billion in debt swiftly, marking a stark contrast to its previous Wall Street struggles.
However, the financial uplift at X Holdings is largely attributed to non-conventional financial reporting. These include incorporating income from affiliates outside its main social media operations and excluding expenses related to extensive layoffs and projects like Musk’s AI venture, xAI Corp. This recalibration suggests a net revenue of approximately $2.6 billion for last year — a notable drop from the $5.1 billion Twitter generated in 2021 before Musk’s acquisition without such adjustments.
The adjusted net profit of nearly $1.4 billion, primarily calculated through EBITDA, highlights an improvement over the financial losses experienced by Twitter previously. Still, these figures do not meet the GAAP standards mandated by the SEC, as noted by sources familiar with the data shared with investors.
Despite these unorthodox financials, X’s debt level remains alarmingly high, standing at approximately nine times its adjusted earnings, significantly above the risk threshold defined by banking authorities. The details on its traditional ad and subscription income remain undisclosed, yet banks promoting its debt highlight the comeback of major advertisers such as Amazon, Apple, and Kraft Heinz.
Musk’s proximity to President Donald Trump appears to play a pivotal role in reviving investor confidence, with many speculating that his influence could have strategic benefits for X Holdings. This connection has altered the risk perception linked to Musk’s ventures, including X Holdings, creating a unique market optimism that supersedes traditional credit anxieties.
Some investors, now choosing to buy into X’s debt, cite a mix of stabilizing finances, the potential of xAI, and the intangible value associated with Musk himself as factors outweighing conventional investment risks. This revived interest coincides with a shift in advertiser sentiment, partly driven by Musk’s legal actions against brands pulling ad dollars, which he argues represents anti-competitive practices.
Despite previous advertiser withdrawals over Musk’s free speech advocacy — which had threatened brand safety on the platform — there is now pressure for these brands to return to X. Musk’s legal pursuits and advisory role to Trump have complicated the decision-making for advertisers, making them reconsider their stance towards X.
Notably, brands like Jeep have resumed their presence on the platform, utilizing X’s advertising potential during high-profile events such as the Super Bowl. However, several prominent brands, including Amazon and Apple, have not publicly commented on their advertising strategies with X, underscoring a cautious approach amid the evolving dynamics.
X Holdings Corp.’s financial strategies and Musk’s influential connections have significantly shifted the narrative for the company. While it remains laden with risk, especially with its accounting practices and debt load, the tactical financial adjustments and strategic alignments have led to renewed investor interest and analyst attention. The coming months will be pivotal in determining whether X Holdings can maintain this positive trajectory or if the intrinsic financial vulnerabilities will prevail in its broader market journey.
