Twitter's rebrand to X could cost it billions in brand recognition
Twitter’s name change to X could erase billions of dollars in company value, but owner Elon Musk was defiant on Tuesday about the decision.
“X will become the most valuable brand on Earth,” he posted on the social network, which still retains a twitter.com domain name.
He reiterated ambitions to make X “the everything app,” and said in the coming months, the company would add “comprehensive communications and the ability to conduct your entire financial world.” Musk did not elaborate on how that would happen. With the scope of features expanding beyond short-form messages, Musk said the rebranding was necessary.
The company now known as X reportedly received approval in New Hampshire, Missouri and Michigan for money transmitter licenses in the last month, part of an effort of expanding into potential financial services.
Still, the name change could be costly: Vanderbilt University estimated that the Twitter brand, built up over 17 years and attracting hundreds of millions of users, was worth $15 billion to $20 billion, as reported by Bloomberg.
That’s around the entire $20 billion valuation that Musk gave the company in March, after he paid $44 billion for it last year. The company’s finances appear to have worsened: This month, Musk said publicly that ad revenue was down around 50% and net cash flow is negative, combined with a heavy debt load, totaling around $13 billion.
Alain Jocard/AFP/TNS
A slew of lawsuits could also discourage users from entrusting Musk and X with their finances if it expands into the sector.
Office landlords, including at its headquarters, have sued the company for alleged nonpayment of rents, as has advisory firm, Innisfree M&A, and public relations firm Joele Frank for alleged nonpayment of services. X also sued prominent law firm Wachtell, Lipton, Rosen & Katz over a $90 million payment related to its work representing the former management of Twitter, which sued in a successful effort to get Musk to buy the company last year.
“X” is also trademarked by hundreds of other companies, including tech giants Meta and Microsoft, which could complicate Musk’s usage of the letter. Microsoft owns an X trademark related to communications for its Xbox video game console, while Meta has a blue and white X logo trademarked, which appears to be connected to its 2020 acquisition of Microsoft’s defunct video game streaming website Mixer.
Meta also recently launched a Twitter-like competitor called Threads, and CEO Mark Zuckerberg has intensified his rivalry with Musk, including promoting the idea of a physical fight.
Michaela Vatcheva/Special to The Chronicle
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Even Musk’s effort to physically remove the Twitter sign at X’s San Francisco headquarters has run into obstacles. The job was only partially completed on Monday after confusion over whether a permit was required, and it was unclear if X’s landlord has given it permission to change the sign, as required by its lease.
On Tuesday, a San Francisco official told The Chronicle that the existing @twitter lettering and blue bird logo could be removed without a permit, but installing something new like an X logo would require one.
“No permit is required to remove letters or symbols from the exterior sign at 1355 Market. Any replacement letters or symbols would require a permit to ensure consistency with the historic nature of the building and to ensure the new additions are safely attached to the sign,” said Patrick Hannan, a Department of Building Inspection spokesperson.
If X continues to bleed money, Musk may be pressured to sell more shares in his electric carmaker company Tesla, which is currently valued at over $831 billion after dropping around 10% in the past week. The company reported that second quarter income rose 20% to $2.7 billion, but Musk said last week more car discounts may be required due to “macro conditions.”
Source: San Francisco Chronicle
