Title: Elon Musk’s Efforts Fail as Twitter’s Advertising Revenue Drops by Half, Cash Flow Still Negative
Date: July 17, 2023
On Saturday, Elon Musk, the owner of Twitter, expressed concern over the platform’s financial state, citing a nearly 50% drop in advertising revenue and a lack of positive cash flow. This contradicts Musk’s earlier statement in March, where he expected Twitter’s cash flow to turn positive in June.
Musk emphasized the importance of achieving positive cash flow before pursuing other ventures, responding to a proposal for a recapitalization. However, on Sunday, he admitted that Twitter had fallen short of its anticipated ad revenue growth in June, but claimed that July showed more promising results. Despite this, expenses currently outweigh revenues.
These signs indicate that Musk’s significant cost-cutting measures implemented since acquiring Twitter in October have not yielded the desired outcome of positive cash flow. Additionally, Musk had previously mentioned that most advertisers had returned to the platform, but it appears that Twitter’s advertising revenue has not recovered as swiftly as he had anticipated.
To curtail costs, Musk initiated large-scale layoffs, reduced spending on cloud services, and managed to decrease non-debt spending from an expected $4.5 billion to $1.5 billion in 2023. However, due to Twitter’s $44 billion acquisition debt, the company still incurs $1.5 billion in annual interest payments.
Notwithstanding these challenges, Musk continues to prioritize improving advertising sales. The recent appointment of Linda Yaccarino, former head of advertising at Comcast’s NBC Universal, as Twitter’s chief executive reflects this commitment. Yaccarino’s expertise suggests that ad sales remain a priority for Twitter, even amidst struggles to grow subscription revenue.
Twitter’s lax content moderation has led to the departure of numerous advertisers who are reluctant to have their ads displayed alongside inappropriate content. This issue has impacted Twitter’s revenue and overall appeal.
Since taking office in June, Yaccarino has outlined her plans to focus on video, creators, and commercial partnerships. She has initiated negotiations with political and entertainment figures, payment services, and news and media publishers.
In a recent effort to attract more content creators to the platform, Twitter officially launched its creator ad revenue-sharing program on Thursday. The program aims to incentivize creators to produce engaging content and contribute to the overall growth and revenue generation of Twitter.
It remains to be seen how Twitter will navigate these challenges and whether Musk’s efforts will ultimately lead to the desired positive cash flow.