X's Valuation Allegedly Reaches $44 Billion Amid Unconventional Financial Reporting

The social media platform X, formerly known as Twitter, is reportedly attempting to raise fresh capital, with claims that its valuation has rebounded to $44 billion--the amount Elon Musk paid for the company. However, this valuation relies on unconventional accounting practices that diverge from standard methodologies used by major corporations.

According to a report from Bloomberg, which cites sources familiar with the company's financial data, X has shared its figures with potential investors. These figures include revenue generated from 'related parties' that are not core to its business operations. Notably, these financial metrics are not recognized by the U.S. Securities and Exchange Commission, and X is no longer publicly traded.

Bloomberg's investigation revealed that X reported a net revenue of $2.6 billion for the past year, roughly half of what it earned before Musk's acquisition. In contrast, X claims to have achieved an adjusted profit of $1.4 billion, while Twitter had been reporting losses prior to the takeover. It is crucial to note that this adjusted profit figure excludes interest, taxes, and depreciation.

Furthermore, X indicated to potential investors that it possesses $400 million in cash reserves, a significant decrease from the $1.4 billion reported before the acquisition. The company attributes this reduction in funds to investments in hardware for its artificial intelligence initiative, xAI. Interestingly, X has reportedly generated $200 million in revenue from xAI.

Bloomberg refers to the financial figures presented by X as 'unusual,' highlighting that the company's debt levels exceed what is typically considered acceptable risk. As a result, potential investors have expressed concerns that these figures may portray an overly optimistic view of X's financial health.

In recent developments, it has come to light that the banks involved in financing Musk's acquisition of Twitter have sold off a majority of their loans in recent weeks with minimal losses. This marks a significant turnaround, as these loans had previously been valued at just 60% of their original worth. Reports indicate that only two months ago, these loans could have been sold at a loss of 10% to 20%.

Additionally, X has been taking aggressive steps against advertisers who have distanced themselves from the platform, further complicating its financial landscape.