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Elon Musk, the name behind social media platform X, is working to turn the platform into an all-encompassing application. A key part of this ambitious plan involves integrating a payment network into the primary social networking service.
Although details of this project are difficult to obtain, a series of documents filed with state regulators offer a new perspective on the company's direction. These heretofore undisclosed documents reveal plans for a Venmo-like payment feature. Thanks to this feature, users will be able to deposit money to their X accounts, make payments to other users or businesses, and even purchase goods and services from physical stores.
Musk has frequently said that X needs to diversify its revenue streams beyond advertising, which has historically accounted for more than 90% of its sales. He also suggested that X has the potential to become the world's largest financial institution. The documents show that X did not intend to charge significant fees for payment services. Instead, the company conveyed to regulators that it views the provision of payment services as a strategy to improve its business by encouraging “increased participation and interaction” in the app.
The financial details shared with regulators also shed light on the business difficulties the company has experienced since Musk took control in late 2022. It reveals that X generated $1.48 billion in revenue in the first half of 2023, a decline of approximately 40% compared to the same period in 2022 before Musk acquired the company. The company reported a loss of $456 million in the first quarter of 2023.
Musk's interest in cryptocurrencies is well known. Automotive company Tesla once held approximately $1.5 billion in Bitcoin on its balance sheet and briefly allowed customers to buy Teslas using Bitcoin. However, this option was quickly suspended and the company has since sold a significant portion of its Bitcoin holdings.
Musk also supports Dogecoin, although he humorously calls it a “scam.” However, X users hoping to transfer their Dogecoin assets to their X wallet will have to wait. The company notified regulators in Maine earlier this year that it currently has no plans to facilitate the sending and receiving of virtual currencies.
*This is not investment advice.