Elon Musk on Saturday revealed that Twitter is facing financial challenges, as advertising revenue has plummeted by 50% and the platform still has a negative cash flow due to its “heavy debt load.”
In response to a follower’s business advice, the billionaire owner tweeted that they need to achieve positive cash flow before considering anything else.
“Need to reach positive cash flow before we have the luxury of anything else,” he tweeted in response to the follower.
CNN reported that Musk’s statement stands in stark contrast to his earlier statement in April when he mentioned that the platform was “roughly breaking even” and most advertisers had returned.
Ever since Musk took over, ad revenue has been a contentious issue, and the platform has faced difficulties in retaining advertisers. Concerns over content moderation, layoffs, and uncertainty about Twitter’s future led to a mass exodus of advertisers.
Recently, Linda Yaccarino, a former NBCUniversal marketing executive, assumed the CEO position, and Musk is likely relying on her advertising expertise to attract advertisers back to the platform.
According to a report from The New York Times, Twitter’s US advertising revenue during the five weeks from April 1 to the first week of May had declined by 59% year-over-year, as per an internal presentation. However, CNN has not independently verified this presentation.
Data from market intelligence firm Sensor Tower indicated that only 43% of Twitter’s top 1,000 advertisers in September (the month before Musk’s takeover) were still advertising on the platform as of April.
In a Twitter Spaces livestream event hosted by Musk and Robert F. Kennedy, Jr, Musk described the situation as extremely difficult, revealing that their revenue had been halved because they did not comply with certain guidelines, and Twitter has struggled to break even.
With the rival app Meta’s Threads surpassing 100 million downloads in less than a week after its launch, Twitter is facing increased pressure to perform.
Musk has implemented various cost-cutting and revenue-seeking measures to combat the financial challenges, such as introducing Twitter Blue memberships with blue checkmarks and putting Tweetdeck behind a paywall.
In a recent move, Twitter announced that content creators could now earn a share of the site’s ad revenue to incentivize more creators to join the platform. To be eligible, creators must have Twitter Blue and achieve at least 5 million impressions on their posts in each of the last three months.
Among the creators set to monetize their content on Twitter is Andrew Tate, a self-proclaimed “misogynist” online influencer who has been indicted in Romania on charges of human trafficking, rape, and setting up a criminal gang.