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Elon Musk says Twitter’s cash flow STILL in the negative as ad revenue drops 50 percent and platform missed out on $200M in sales during a five week period between April and May
- Twitter owner Elon Musk said in a tweet that the social media platform is continuing to struggle financially
- Musk said that the company was expecting an ad revenue increase in June that never materialized
- Over a five-week period between April and May, Twitter missed out on around $200 million in ad revenue with Musk saying that July is more ‘promising’
Twitter continues to endure money problems after owner Elon Musk revealed that the social media platform has suffered an advertising revenue drop of 50 percent in addition to a heavy debt load.
‘Need to reach positive cash flow before we have the luxury of anything else,’ Musk wrote in a tweet on Saturday.
Musk said on Sunday in another tweet that Twitter did not see the increase in advertising revenue that had been expected in June, adding, ‘July is a bit more promising.’ In April, Musk said in an interview that Twitter would be in ‘positive cash flow’ by the third quarter.
Twitter Spaces also hasn’t generated revenue yet and is ‘all-cost’, Musk said.
It is unclear what time frame Musk was referring to by the 50 percent drop in ad revenue. He has said Twitter was on track to post $3 billion in revenue in 2023, down from $5.1 billion in 2021.
In June, the New York Times reported that Twitter’s US ad revenue was down 59 percent between April 1 and the first week of May year-over-year, amounting to close to $200 million.
Twitter owner Elon Musk said in a tweet that the social media platform is continuing to struggle financially
Musk said that the company was expecting an ad revenue increase in June that never materialized
As of April, just 43 percent of Twitter’s 1,000 top advertisers before Musk’s takeover have remained on the platform, reports CNN.
The new Meta project, Threads, referred by many as a ‘Twitter-killer’ has amassed 150 million subscribers after launching last week. An in-built connection to Instagram gives the company access to that platform’s two billion users.
This is the latest sign that the aggressive cost-cutting measures since Musk acquired Twitter in October alone are not enough to get Twitter to cash flow positive, and suggests ad revenue may have not recovered as fast as Musk suggested in an interview in April with the BBC that most advertisers had returned to the site.
At the time Musk said that ‘almost all’ advertisers were back on the site and that the company was on pace to ‘roughly breakeven’ with an expectation that Twitter would be come cash flow positive over the summer.
Just this week, the company began giving certain content creators a share of ad revenue. According to a post from accused rapist and human trafficker Andrew Tate, he received over $20,000.
Other right-wing activists posted about receiving money as well as influencers who promote Tesla products, reports CNBC.
After laying off 7,500 of employees and cutting cloud service bills, Musk had said the company reduced its non-debt expenditures to $1.5 billion from a projected $4.5 billion in 2023.
After Musk assumed control of Twitter in October 2022, he fired Twitter’s executive leadership and dismantled its board. Twitter then conducted four rounds of broad employee layoffs, slashing its headcount by about 80 percent, from an estimated 7,800 to about 1,500
Right-wing influencer, Andrew Tate, who is facing rape and human trafficking charges in Romania, says he was paid over $20,000 by Twitter in ad revenue share
Twitter also faces annual interest payments of about $1.5 billion as a result of the debt it took on in the $44 billion deal that turned the company private.
Lucy Coutts, an investment directors at JM Finn, told the BBC’s Today show that she felt as though Musk would be able to right the ship at Twitter ‘but it is just going to take longer.’
Coutts went on to say that the South African might be forced to sell more of his position in Tesla in order to keep up with debt repayments.
Speaking in the same interview, Meghanna Dhar, a former Snapchat and Meta executive, pointed out that Twitter was struggling badly until Musk’s takeover.
‘Elon and Twitter are in a candidly tough position right now. To be fair to Elon though, we’ve seen that decline in Twitter revenue and growth in revenue since pre-Elon – there’s been kind of a steady decline,’ Dhar said.
Twitter has been criticized over lax content moderation, followed by an exodus of many advertisers who did not want their ads appearing next to inappropriate content.
Musk’s hiring of Linda Yaccarino, former ad chief at Comcast’s NBCUniversal as CEO, signaled that ad sales are a priority for Twitter even as it works to increase subscription revenue.
Yaccarino started working at Twitter in early June and has told investors Twitter plans to focus on video, creator and commerce partnerships and is in early talks with political and entertainment figures, payments services, and news and media publishers.
She has been silent about Musk’s most recent drastic change to Twitter.
Musk’s hiring of Linda Yaccarino, former ad chief at Comcast’s NBCUniversal as CEO, shown here, signaled that ad sales are a priority for Twitter
Earlier this month, Musk attracted more criticism when he placed limits on the amount that unverified users could scroll on the site.
Keeping up with a up with sports or weather or a major news event is getting harder under Musk’s new rules, which cap the number of tweets you can view as part of an apparent attempt to relieve the company’s overloaded web infrastructure.
‘The joke on Twitter is that people are going to go outside instead, but the reality is that they’re going to go to another app,’ said Jasmine Enberg, an analyst with Insider Intelligence.
‘By sending users elsewhere, Musk is killing the main proposition Twitter has had for advertisers — a highly engaged user base, especially around news and events.’
The moves are ‘remarkably bad for Twitter’s users and advertisers,’ decimating the reach and engagement that advertisers depend on, according to a statement from Forrester analyst Mike Proulx.
‘The advertiser trust deficit that Linda Yaccarino needs to reverse just got even bigger. And it cannot be reversed based on her industry credibility alone,’ Proulx said.
Musk had tried on Saturday to describe how the limits work, saying accounts that don’t pay for a monthly subscription will temporarily be restricted to reading 600 posts per day, while verified accounts will be able to scroll through up to 6,000.
After facing backlash, he tweeted that the thresholds would be raised to 800 posts for unverified account and 8,000 for verified account before later settling on 1,000 and 10,000 tweets, respectively.
Forbes has listed Musk has the world’s richest man with a net worth of $246 billion, two thirds of that fortune is related to Tesla.
Many unverified users are ‘going to hit that limit fast,’ said Enberg, because most Twitter users are consuming, not creating posts, and ‘typically scroll through an enormous number of tweets in a short period of time.’
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