X bolsters SpaceX valuation as user engagement holds despite weaker revenue

Highlights

X and Grok together made $3.2bn revenue in 2023, down from Twitter's $5.1bn in 2022, as advertisers cut spending over moderation concerns.
Monthly user numbers on X stagnated or declined over the past year, but average time per visit rose from just over two minutes to three minutes.
Morgan Stanley forecasts X and Grok revenue could reach $35bn by 2030, supporting SpaceX's rich valuation at 21 times forward revenue versus Meta Platforms' multiple.

Platform changes and financial trade-offs

As reported by the Financial Times, X has evolved from the old Twitter in several ways that help explain its continued influence in Silicon Valley and politics. Posts are longer, prominent users including Donald Trump are back, Grok is built into the platform, and Musk has folded the business into SpaceX.

The financial picture remains much weaker than earlier expectations. Twitter generated $5.1bn in annual sales in 2022 and executives had expected revenue to reach $9.8bn by 2025, but X and Grok together made $3.2bn last year as advertisers pulled back amid Musk's light-touch moderation approach and political controversies.

Engagement trends and valuation effects

Usage data presents a mixed picture. Similarweb figures show monthly user numbers have slipped or stagnated for at least a year, but average time spent on the site or app has risen to three minutes per visit from a little over two minutes a year earlier.

Consumer data from HundredX also indicates that more than a third of X users are considering, or might consider, switching to another platform, most often Bluesky. Even so, the share of respondents giving feedback on X has changed little, indicating many users do not actually leave.

For SpaceX investors, that staying power could matter more than X's stand-alone revenue. Morgan Stanley has said revenue at X and Grok could approach $35bn by 2030, and even if that proves too optimistic, X still amplifies Musk's public profile, which may support the valuation premium attached to SpaceX.

With SpaceX trading at 21 times forecast revenue for next year, roughly triple the multiple of Meta Platforms, the article argues that only a modest boost to that valuation multiple would be enough to justify much of the $44bn Musk paid for Twitter in 2022.

In our earlier article, we covered Elon Musk’s pledge that SpaceX would reimburse users if Grok makes a financial mistake or leaks card details while completing purchases. We noted that the commitment went further than typical AI-agent terms that generally place transaction liability on users, while the exact scope of the guarantee remained unclear as AI agents increasingly handle payments and bookings.

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