Twitter is facing ongoing negative cash flow due to a significant drop of nearly 50% in advertising revenue and a heavy debt burden. Elon Musk, who acquired Twitter in October, expressed his disappointment with the app’s performance in March and hoped for positive cash flow by June.
Despite aggressive cost-cutting measures, including layoffs and reduced cloud service bills, Twitter’s ad revenue has not recovered as quickly as anticipated. The company faces annual interest payments of approximately $1.5 billion as a result of the debt taken on during the $44 billion acquisition that made Twitter private.
Musk previously projected that Twitter would generate $3 billion in revenue for 2023, down from $5.1 billion in 2021. However, the 50% drop in ad revenue mentioned in his recent statement is not clearly defined in terms of the time frame.
Twitter has faced criticism for poor content moderation, leading to the departure of advertisers who didn’t want their ads associated with inappropriate content. To address this, Musk hired Linda Yaccarino, emphasizing the importance of ad sales for Twitter while also aiming to increase subscription revenue.
Meanwhile, Twitter’s rival platform, Threads, is not currently hosting advertisements and is not competing directly with Twitter for revenue. However, Threads has experienced remarkable growth, reaching 100 million users and achieving the most successful app launch in the last decade.
In an effort to attract more content creators, Twitter recently announced that select creators will be eligible to receive a portion of the ad revenue earned by the company. The platform has already begun paying content creators for posting advertisements, with some users reporting payouts exceeding $10,000.
PHOTO CREDIT: Economictimes