In Finding Where Twitter Is Buried... "X" Marks the Spot

Given that it’s earnings season, let’s run through a quick exercise.

Company A produced $88 million less in advertising revenue in the first four months of this year than the year prior.

Company A relies on advertising to account for 90% of its total revenue.

Our conclusion: Company A needs to make some drastic operational changes – and fast.

The how is up for debate though…

In 2020, Vistaprint commissioned a survey to measure the value of a recognizable logo to branding.

The findings confirmed what most people instinctively know: 50% say they are more likely to use a company whose logo they recognize. Meanwhile, 60% say an ugly or weird logo serves as a deterrent.

And these results speak to customer retention. A staggering 85% of participants indicated they stay loyal to a company if they like its brand and logo.

Now, as part of that study, a list of the top 30 most-recognizable brands was released…

To no surprise, the top five are: Apple (AAPL), McDonald’s (MCD), Coca-Cola (KO), Nike (NKE), and Starbucks (SBUX).

These brands are so recognizable they’re intertwined with the fabric of capitalism.

But there’s another company on that list – our beloved Company A, sitting at No. 16 – that decided to take a different tact…

This past weekend, Elon Musk announced he would “bid adieu to the Twitter brand and, gradually, all the birds.” The platform is rebranding to X.

And while supporters say this change will usher in “the future of society,” detractors insist it’s the proverbial nail in a $44-billion coffin…

Musk Can’t Leave “X” Alone

For many, this feels like déjà vu.

After all, was already used once before… by none other than Musk himself.

In 1999, he paid $12 million for the domain. Musk had grand visions of creating an online, full-service bank.

But he was ousted as the company’s CEO by Peter Thiel in 2000. And was rebranded into PayPal. The rest is history.

However, Musk couldn’t leave his visions of in the history books…

And despite running multiple multi-billion-dollar companies in the interim – and spending $44 billion to acquire the company formerly known as Twitter – he has set forth on a perhaps Don Quixote-like mission to rebrand one of the world’s most recognizable names.

The reality is this rebrand is simply par for the course for Musk’s tenure as self-proclaimed “chief Twit.”

After purchasing the company at a 38% premium, Musk declared it’s since lost roughly two-thirds of its value.

And in a much maligned (and mocked) Tweet (or X? Sorry, still getting our vernacular bearings) from this weekend, now-X CIO Linda Yaccarino said the following…

Lofty promises, indeed.

However, lost in this hoopla for Musk and company is the simple fact that, in doing such a dramatic rebranding (in addition to the company’s actions the past year), they’ve nixed the core purpose of the product.

The fervor from Twitter users lamenting the lack of substitutes and pining for alternatives to the ever-shaky, Musk-led ground is reaching a fever pitch.

But one company’s missteps are another’s windfall.

The Fastest Track to 100 Million

One need not look further than the release of Meta Platforms (META)-created Threads for proof.

As we noted in the July 14 Pre-Market Prep Chart of the Day, while it took Twitter more than 60 months to reach 100 million users… Threads needed just five days.

And Meta – which underwent a rebrand of its own, but wisely kept its social media platform unchanged – is surely licking its chops at the latest decision by Musk.

Set to announce second-quarter earnings after the market’s close today, expectations are understandably high. It’s not surprising, given Meta shares have increased more than 130% in 2023 thanks to artificial intelligence and Musk’s missteps.

And while the jury is still out for Threads as a legitimate threat to displace the artist formerly known as Twitter, there’s no denying Musk is holding an industrial-sized fan to its sails.

Who knows, in two- or three years’ time we may look back at this decision as one of the most brilliant in corporate history.

But as @TheCartelDel astutely pointed out on Musk’s platform, terms like “tweet” and “retweet” becoming a part of the social lexicon are precisely the type of branding other social media applications dream of…and have failed to duplicate.

So, it’s curious, to say the least… To pivot away from that sweeping recognition in favor of the unknown.

X’s Existential Crisis

Ironically enough, just the one thing we do know about “X” is there will likely be legal hurdles in the future.

Given the commonness of, well, a single letter, Musk and Co. could find themselves in a court of law either defending its use or challenging another company’s use.

For what it’s worth, Microsoft (MSFT), on the account of the Xbox, already possesses a trademark for the use of “X” as it pertains to video games. And Instagram owns a trademark for the use of a blue-and-white X for social media and software.

So, while it’s unlikely either of those mega caps goes after the new kid on the X in court, the exposure is clear…

"Given the difficulty in protecting a single letter, especially one as popular commercially as 'X,' Twitter's protection is likely to be confined to very similar graphics to their X logo," Loeb & Loeb trademark attorney Douglas Masters told Reuters.

“The logo does not have much distinctive about it, so the protection will be very narrow.”

Legal issues aside, it’s not unfair to say Day 1 of the rebrand was a bit… disjointed.

Here’s what looked like on Monday…

Suffice it to say, there’s still a lot of work to be done to transition X from the funny pages to the business section.

According to analysts, Musk’s decision will wipe at least $4 billion (and up to $20 billion) in brand equity from the company’s already falling valuation.

However, it should be noted that Twitter’s estimated $4-billion brand value by brand valuation consulting firm Brand Finance pales in comparison to Facebook’s $59-billion and Instagram’s $47.4-billion marks.

An ominous reminder of the danger of rolling out the red carpet for one of its main competitors.

For now, let’s enjoy some quality Tweets…for as long as they’re legally still allowed to be called that…