Twitter continues to struggle with money after owner Elon Musk revealed that the social media platform suffered a 50 percent drop in ad revenue on top of a heavy debt load.
“We need to get cash flow positive before we can afford anything else,” Musk wrote in a tweet on Saturday.
Musk said in another tweet on Sunday that Twitter did not see the increase in ad revenue expected in June, adding that “July is a little more promising.” In April, Musk said in an interview that Twitter would be “cash flow positive” in the third quarter.
Twitter Spaces has also not generated revenue yet and is “all cost,” Musk said.
It’s unclear what time period Musk was referring to with the 50 percent drop in ad revenue. He 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 fell 59 percent between April 1 and the first week of May year-over-year, reaching close to $200 million.
Twitter owner Elon Musk said in a tweet that the social media platform continues to struggle financially.
Musk said the company expected an ad revenue boost in June that never materialized.
As of April, only 43 percent of Twitter’s top 1,000 advertisers before the Musk acquisition remained on the platform, according to reports. CNN.
The new Meta project, Threads, which many refer to as a ‘Twitter killer’, has amassed 150 million subscribers after launching last week. An integrated connection to Instagram gives the company access to that platform’s two billion users.
This is the latest sign that aggressive cost-cutting measures since Musk acquired Twitter in October are not enough to keep Twitter cash flow positive, and suggests that ad revenue may not have rebounded as quickly as Musk suggested in an April interview 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 track to “more or less break even” with the expectation that Twitter would be 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 by accused rapist and human trafficker Andrew Tate, he received more than $20,000.
Other right-wing activists posted about receiving money, as well as influencers promoting Tesla products, CNBC reports.
After laying off 7,500 employees and slashing cloud service bills, Musk said the company cut its non-debt spending to $1.5 billion from a projected $4.5 billion in 2023.
After Musk took over Twitter in October 2022, he fired Twitter’s executive leadership and dismantled its board of directors. Twitter then carried out four rounds of blanket employee layoffs, reducing its headcount by about 80 percent, from an estimated 7,800 to about 1,500.
Right-wing influencer Andrew Tate, who faces rape and human trafficking charges in Romania, says Twitter paid him more than $20,000 in ad revenue.
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 took the company private.
Lucy Coutts, chief investment officer at JM Finn, told the bbc today shows he felt Musk could right the ship on Twitter “but it’s just going to take longer.”
Coutts went on to say that the South African may be forced to sell more of his Tesla position to keep up with debt payments.
Speaking in the same interview, Meghanna Dhar, a former Snapchat and Meta executive, noted that Twitter was struggling a lot until Musk took over.
“Elon and Twitter are in a really difficult position right now. However, to be fair to Elon, we’ve seen that decline in Twitter revenue and revenue growth since before Elon; there’s been kind of a steady decline,” Dhar said.
Twitter has been criticized for lax content moderation, followed by an exodus of many advertisers who did not want their ads to appear alongside inappropriate content.
Musk’s hiring of Linda Yaccarino, former head of advertising for Comcast’s NBCUniversal as chief executive, signaled that ad sales are a priority for Twitter even as it works to grow subscription revenue.
Yaccarino started working at Twitter in early June and has told investors that Twitter plans to focus on video, creator and commerce partnerships and is in initial talks with political and entertainment figures, payment services and news and media publishers. .
He has kept quiet about Musk’s most recent drastic change on Twitter.
Musk’s hiring of Linda Yaccarino, former head of advertising for Comcast’s NBCUniversal as chief executive, shown here, signaled that ad sales are a priority for Twitter.
Earlier this month, Musk drew further criticism when he placed limits on the amount unverified users could scroll on the site.
Keeping up with sports, the weather or a major news event is becoming more difficult with Musk’s new rules, which limit the number of tweets you can see as part of an apparent attempt to ease the company’s overburdened web infrastructure. .
“The joke on Twitter is that people are going to leave, but the reality is that they are going to go to another app,” said Jasmine Enberg, an analyst at Insider Intelligence.
“By sending users elsewhere, Musk is eliminating 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 users and advertisers,” decimating the reach and engagement advertisers depend on, according to a statement from Forrester analyst Mike Proulx.
‘The advertiser trust deficit that Linda Yaccarino needs to reverse is even bigger. And it cannot be reversed based solely on its credibility in the industry,” Proulx said.
Musk had tried on Saturday to describe how the limits work, saying that accounts that don’t pay a monthly subscription will be temporarily restricted to reading 600 posts a day, while verified accounts will be able to scroll up to 6,000.
After facing backlash, he tweeted that the thresholds would be raised to 800 posts for unverified accounts and 8,000 for verified accounts before settling at 1,000 and 10,000 tweets, respectively.
Forbes has listed Musk as 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 quickly,” Enberg said, because most Twitter users are consuming, not creating posts, and “typically scrolling through an enormous number of tweets in a short amount of time.”