According to Elon Musk, the owner of Twitter, the social media platform has experienced a nearly 50% drop in advertising revenue, leading to negative cash flow and a heavy debt load. Musk stated that this decline in revenue has fallen short of his expectation that Twitter could achieve positive cash flow by June.
Despite aggressive cost-cutting measures implemented since Musk acquired Twitter in October, the company has not been able to reach positive cash flow. Musk had previously mentioned in an interview with the BBC in April that most advertisers had returned to the site, but it appears that advertising revenue may not have recovered as quickly as anticipated.
Twitter has undertaken significant cost-cutting efforts, including laying off employees and reducing cloud service bills, resulting in a decrease in non-debt expenditures from a projected $4.5 billion to $1.5 billion in 2023. However, Twitter still faces annual interest payments of approximately $1.5 billion due to the debt taken on during the $44 billion deal that privatized the company.
Musk’s remarks about the 50% drop in advertising revenue did not specify the time frame. He previously projected that Twitter would generate $3 billion in revenue in 2023, down from $5.1 billion in 2021. Twitter has faced criticism for its lax content moderation, leading to the departure of many advertisers who did not want their ads appearing alongside inappropriate content.
Musk’s hiring of Linda Yaccarino as CEO, a former ad chief at Comcast’s NBC Universal, indicates that advertising sales are a priority for Twitter. Yaccarino has emphasised the platform’s focus on video, creator, and commerce partnerships, and has been in early talks with political and entertainment figures, payments services, and news and media publishers. Twitter recently announced that select content creators will be eligible to receive a portion of the advertising revenue earned by the company in an effort to attract more creators to the platform.
