Elon Musk has raised concerns about Twitter’s ongoing financial struggles, highlighting that the company continues to spend more money than it generates. In an early morning tweet on Saturday, the billionaire pointed out that Twitter is grappling with a persistent negative cash flow issue, primarily caused by a drastic 50 percent decline in advertising revenue and a burdensome debt load. Musk emphasized the need for the company to achieve positive cash flow before pursuing other endeavors.
Interestingly, Musk’s admission coincides with the initiation of Twitter’s ad-revenue sharing program, which recently started compensating certain creators, including a few influential figures from the far-right. On Friday, Musk also predicted that the social media platform could witness a significant surge in user engagement, potentially reaching an all-time high in device user seconds usage during the week. Additionally, he mentioned that the majority of advertisers who had initially departed from the platform following his acquisition in October had either returned or expressed their intention to do so.
We’re still negative cash flow, due to ~50% drop in advertising revenue plus heavy debt load. Need to reach positive cash flow before we have the luxury of anything else.
— Elon Musk (@elonmusk) July 15, 2023
According to research firm Sensor Tower, advertising spending on Twitter experienced a substantial 89 percent decline to $7.6 million during a two-month period earlier this year, as reported by Bloomberg. Reuters revealed that Twitter currently faces annual interest payments amounting to approximately $1.5 billion due to the debt it incurred when Musk took the company private for $44 billion. These findings indicate that despite Musk’s aggressive cost-cutting measures over the past year, Twitter still struggles to establish a solid financial foundation. It also underscores the considerable task ahead for the company’s newly appointed CEO, Linda Yaccarino, as she endeavors to rebuild Twitter’s advertising base.
