Elon Musk says Twitter’s cash flow is still in the negative as ad revenue fell 50 percent and the platform missed $200M in sales in the five weeks between April and May.

Elon Musk says Twitter's cash flow is still in the negative as ad revenue fell 50 percent and the platform missed $200M in sales in the five weeks between April and May.

Twitter continues to endure money woes after owner Elon Musk revealed that the social media platform has seen a 50 percent drop in advertising revenue in addition to a heavy debt load.

“We need to get to positive cash flow before we have the luxury of anything else,” Musk wrote in a tweet on Saturday.

Musk said in another tweet on Sunday that Twitter didn’t see the expected ad revenue growth in June, adding, ‘July is a bit more promising.’ In April, Musk said in an interview that Twitter would be “cash flow positive” in the third quarter.

Twitter Spaces has also yet to generate revenue and is ‘all cost’, Musk said.

It’s unclear what timeframe Musk was referring to by 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 U.S. ad revenue fell 59 percent from April 1 to the first week of May, close to $200 million year-over-year.

Twitter owner Elon Musk said in a tweet that the social media platform continues to struggle financially

Musk said the company expected ad revenue growth in June, which never materialized

As of April, only 43 percent of Twitter’s top 1,000 advertisers before Musk’s takeover remained on the platform, CNN reported.

The new meta project, Threads, dubbed by many as the ‘Twitter-killer’, has amassed 150 million subscribers since its launch last week. A built-in connection to Instagram gives the company access to that platform’s two billion users.

It’s the latest sign that aggressive cost-cutting measures since Musk acquired Twitter in October alone aren’t enough to make Twitter cash-flow positive, and suggests that ad revenue hasn’t recovered as quickly as Musk suggested in an interview last April. Most of the advertisers that the BBC returned to the site.

Musk said at the time that “almost all” advertisers had returned to the site and that the company was on pace to “roughly breakeven” with expectations that Twitter would be cash flow positive in the summer.

Just this week, the company began paying a portion of ad revenue to certain content creators. According to a post by alleged rapist and human trafficker Andrew Tate, he received more than $20,000.

Other right-wing activists have posted about receiving money as well as influencers who promote Tesla products, CNBC reported.

After laying off 7,500 workers and cutting cloud services bills, Musk said the company had cut its non-debt spending by $1.5 billion from the $4.5 billion it projected in 2023.

After Musk took control of Twitter in October 2022, he fired Twitter’s executive leadership and disbanded its board. Twitter then conducted four rounds of sweeping employee layoffs, reducing its headcount by nearly 80 percent, from an estimated 7,800 to about 1,500.

Right-wing influencer Andrew Tate, who is facing charges of rape and human trafficking in Romania, said he was paid more than $20,000 by Twitter in ad revenue sharing.

Twitter faces about $1.5 billion in annual interest payments as a result of the debt that took the company private in a $44 billion deal.

Lucy Coutts, an investment director at JM Finn, told the BBC’s Today show that she felt as if Musk would be able to right the ship on Twitter ‘but it’s going to take longer.’

Coutts said the South African may be forced to sell more of its position in Tesla to keep up with debt repayments.

Speaking in the same interview, Meghna Dhar, a former Snapchat and Meta executive, noted that Twitter was struggling badly until Musk took over.

Elon and Twitter are clearly in a tough spot right now. Although to be fair to Elon, we’ve seen Twitter’s revenue decline and revenue growth from pre-Elon – there’s been a steady decline,’ Dhar said.

Twitter has been criticized for lax content moderation, after which many advertisers did not want their ads to appear next to inappropriate content.

Musk’s hiring of Comcast’s NBCUniversal’s former ad chief, Linda Iaccarino, as CEO signals that ad sales are a priority for Twitter even as it works to grow subscription revenue.

Iaccarino started working at Twitter in early June and told investors Twitter plans to focus on video, creator and commerce partnerships, and is in early talks with political and entertainment figures, paid services and news and media publishers.

He remained silent about Musk’s latest drastic changes on Twitter.

Comcast’s hiring of NBCUniversal’s former ad chief Linda Iaccarino as CEO, shown here, signals that ad sales are a priority for Twitter.

Earlier this month, Musk drew further criticism when he placed limits on the amount of unverified users who could scroll through the site.

Keeping up with sports or the weather or a major news event is getting harder under Musk’s new rules, which limit the number of tweets you can see as part of an apparent effort to relieve the company’s overloaded web infrastructure.

Insider Intelligence analyst Jasmine Enberg said: ‘The joke on Twitter is that people are going to go out instead, but the reality is they’re going to go to other apps.’

‘By sending users elsewhere, Musk is killing the main proposition for Twitter advertisers – a highly engaged user base, especially around news and events.’

According to a statement from Forrester analyst Mike Proulx, the moves are “significantly bad for Twitter’s users and advertisers,” reducing the reach and engagement that advertisers rely on.

‘The deficit in advertiser confidence that Linda Iaccarino must reverse has only gotten bigger. And it cannot be reversed based solely on its industrial credibility,’ Proulx said.

Musk tried to explain how the limits work on Saturday, saying accounts that don’t pay for a monthly subscription will be temporarily limited to reading 600 posts per 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 verified accounts and 8,000 for unverified accounts before hitting 1,000 and 10,000 tweets respectively.

Forbes lists Musk as the world’s richest man with a net worth of $246 billion, two-thirds of which is attributable to Tesla.

Many unverified users are “going to hit that limit quickly,” Enberg says, because most Twitter users are using, not creating posts and “usually scrolling through a large number of tweets in a short amount of time.”


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