Jeff Bezos-founded Amazon.com (AMZN) is bolstering its advertising spending budget on Elon Musk’s social media platform X. The news was first reported by the Wall Street Journal, citing people familiar with the matter. The two have been often spotted exchanging pleasantries at Trump’s events.
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The shift comes as a surprise since major advertisers, including Amazon, pulled off from advertising their brands on X, owing to hateful content. CEO Andy Jessy is said to be in active discussions about significantly increasing the ad spend on X. Similarly, iPhone maker Apple (AAPL) is also discussing the possibility of testing its ads on the platform, according to people familiar with the matter.
Why Are Advertisers Returning to Musk’s X?
Advertisers who were once fleeing from Musk’s X are now flocking back in bulk to the platform. Musk’s close ties and campaign support for the newly instated U.S. President Donald Trump seems to have worked the magic. Trump has even named Musk a leader of the D.O.G.E. (Department of Government Efficiency), responsible for curbing $2 trillion in government spending.
It’s not just Musk. Several other companies and their CEOs are all trying to improve their relations with President Trump. Most of the big tech companies contributed toward Trump’s inaugural fund and are seen openly supporting his ideologies. Tech firms had a difficult time during Trump’s first stint as the President, and this time they hope things will be different.
Meanwhile, although advertisers are returning to X, sources claim that the level of ad spend still remains meaningfully low compared to the pre-exit levels.
Musk and the Twitter Takeover
In late 2023, a host of companies fled from X after Musk supported an antisemitic post on the platform. Musk’s takeover of Twitter, now X, had already sparked concerns over content moderation. Brands were shy of advertising their names alongside hateful content. However, the tides seem to be turning in Musk’s favor after his foray into politics. Importantly, his support for Trump is proving to be potentially beneficial for all of his companies.
For Musk, the increase in ad spend is a good sign since it will support X’s ailing balance sheet. Recently, reports suggested that Wall Street banks, who supported Musk in buying Twitter in 2022, are trying to offload debt worth $3 billion at 90-95 cents on the dollar.
Is Amazon a Buy or Sell Stock?
Amazon is set to release its Q4 FY24 results on February 6. The Street expects Amazon to post diluted EPS (earnings per share) of $1.48 on revenue of $187.31 billion. This compares favorably to the prior year period when Amazon reported diluted EPS of $1.00 on revenue of $169.96 billion.
Wall Street remains optimistic on Amazon stock ahead of the results. On TipRanks, AMZN stock has a Strong Buy consensus rating based on 49 Buys and one Hold rating. The average Amazon.com price target of $256.04 implies 9.1% upside potential from current levels. Meanwhile, in the past year, AMZN shares have gained 51.2%.
