New York Turning Twitter around has been harder than expected for Elon Musk. Cash flow remained negative, he wrote in a text message service on Saturday.
Musk actually hopes to make more money than he spent in June. But Twitter’s ad revenue has plummeted. As Musk acknowledged, those numbers have almost halved. Twitter is also carrying a “significant debt load,” he wrote.
It’s another sign that Musk’s aggressive cost-cutting isn’t doing enough to boost Twitter’s profitability. Since taking over Twitter in the fall of 2022, the billionaire has imposed severe austerity measures on the company. Also, ad revenue doesn’t appear to be recovering as quickly as Musk indicated in April.
In an interview with the BBC at the time, he said most advertisers had returned to the site. Twitter has recently come under fire for not moderating content on the site under Musk’s leadership. This is why many advertisers say no: they don’t want their ads to appear with inappropriate content.
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Twitter needs to be cash flow positive “before we can afford anything else,” Musk wrote on Saturday. He was responding to a tweet about a proposed company recapitalization. It was initially unclear which period Musk was referring to when he said the 50% decline in ad revenue was in question.
He has previously said that Twitter’s revenue is on track to grow from $5.1 billion in 2021 to $3 billion in 2023.
Musk dumps debt on Twitter
Musk took over Twitter in October 2022 for about $44 billion after he canceled the project over an alleged spate of fake user accounts, though Twitter fought back in court. Musk, who also runs electric carmaker Tesla and space company SpaceX, also collected $13 billion in debt from Twitter as part of the acquisition. The annual interest payments alone amount to $1.5 billion, according to Reuters calculations.
Musk initially took over the role at Twitter himself. He took the company public and laid off most of the staff.
In June, he named Linda Yaccarino as chief executive. She previously served as director of advertising for media company NBC Universal. Musk said that while the messaging service continues to work on growing its subscription revenue, he is still prioritizing ad sales on Twitter.
Meta competes with Musk on threads
Yacarino needs to do some damage control. Musk’s frenetic attitude and deep cuts have seriously damaged Twitter’s reputation. Far-right influencers have gained influence and influence on the platform. Time and time again, users report a dramatic increase in the number of personal insults on text messaging services.
The fact that Musk runs Tesla as well as Twitter also makes many auto companies skeptical that they would rather place their ads elsewhere in the future.
Musk now faces competition from Threads, a new social network owned by Facebook parent company Meta. Meta boss Mark Zuckerberg pitched Threads as a friendlier alternative to Twitter, and it hit 100 million users in five days. However, the service is currently not available in Germany or other EU countries.
To reach users, Twitter has now announced that it will share some of its ad revenue with popular “content creators.” Some, including far-right influencers, said they received thousands of dollars from Twitter.
Musk is also dealing with some lawsuits. Suppliers claim unpaid invoices in court. Musk had promised to pay him severance packages, but former employees who never got paid complained only on Wednesday. They are seeking a total of $500 million in damages from their former employers.
There are proxy materials.
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