As the competition between Elon Musk’s Twitter and Mark Zuckerberg’s Threads heats up, the Twitter owner revealed on Saturday that the platform is in negative cash flow by a 50% drop in advertising revenue and a “heavy debt.”
Elon Musk claims that Twitter’s ad revenue has dropped by 50%
“We still have negative cash flow due to (approximately) a 50 percent drop in advertising revenue plus heavy debt. We need to achieve positive cash flow before we have the luxury of anything else,” Musk replied in a tweet to business advice from a follower.
We’re still in negative cash flow due to a ~50% drop in ad revenue plus heavy debt. Need to achieve positive cash flow before we have the luxury of anything else.
— Elon Musk (@elonmusk) July 15, 2023
Musk, who also serves as the CEO of Tesla and SpaceX, acquired Twitter in a $44 billion deal late October last year. Since taking over Twitter, he has made several changes to the product and company structure, which he says have reduced the company’s cash burn and debt burden.
Not only this, the company has also faced controversies, be it the widespread layoffs or firing of top executives before the launch of the Twitter Blue subscription program, the different approach to content moderation or the re-admission of some banned high-profile users in place.
Musk in April told the BBC that the platform is now “roughly breaking even” and that most advertisers are returning to the site. He also added that the platform could become cash flow positive by the end of June.
Contrary to the above, Musk said last month at a Twitter Spaces livestream event hosted by Robert F. Kennedy, Jr. In short, our turnover is cut in half because we have not kept a leash. He added that it has been a “massive struggle for Twitter to break even”.
Saturday’s shocking admission comes the same week Twitter announced Ad revenue sharing program for creators in an effort to encourage more creators to join the site. Under this program, select content creators would be eligible for the ad revenue sharing program, which would allow them to earn a share of the ad revenue from ads that appear in the replies to their posts.
While challenging financially for Twitter, the microblogging platform has also come under increasing pressure after its rival app, Meta’s Threads, was downloaded more than 100 million times within a week of its launch.