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Elon Musk's Twitter Struggles with 50% Ad Revenue Plunge and Negative Cash Flow

Twitter, under the leadership of Elon Musk, faces severe financial challenges due to a sharp decrease in advertising revenue and persistent negative cash flow.

Elon Musk
Elon Musk

Persistent Negative Cash Flow Despite Cost-Cutting Measures

Twitter's cash flow continues to be in the red, primarily due to a significant 50% decline in advertising revenue and a substantial debt burden, according to Musk. Despite his optimism earlier this year that the company could attain a positive cash flow by June, Musk recently tweeted about the ongoing struggle, indicating the need to achieve positive cash flow before considering any other financial strategies.

Unexpected Ad Revenue Drop, Twitter Spaces Still Non-Profitable

On Sunday, Musk noted that Twitter did not witness the anticipated surge in advertising revenue for June, but remained hopeful about improved performance in July. Moreover, he pointed out that Twitter Spaces, despite being an intriguing feature, is yet to generate any revenue, functioning at "all-cost".

Musk's Efforts to Steer Twitter to Profitability

Despite aggressive cost-cutting measures instituted since Musk took over Twitter last October, the platform is still far from reaching positive cash flow. This indicates that Twitter's ad revenue recovery is slower than Musk had previously suggested in a BBC interview last April. The cost-saving measures, which included layoffs and reductions in cloud service expenses, managed to decrease non-debt expenditures from a projected $4.5 billion to $1.5 billion in 2023.

Twitter's High Debt Load and Content Moderation Woes

Another critical financial challenge for Twitter is the annual interest payments of around $1.5 billion, stemming from the debt incurred during the $44 billion privatization deal. Furthermore, Twitter's reputation has been tarnished due to lax content moderation, leading to an advertiser exodus from the platform.

Twitter logo
Twitter logo

Focus on Ad Sales and New CEO Appointment

Musk's recruitment of Linda Yaccarino, former ad chief at Comcast's NBCUniversal, as CEO, signifies a renewed focus on ad sales, even while trying to boost subscription revenue. Yaccarino, who started at Twitter in early June, expressed to investors that the company intends to concentrate on video, creator, and commerce partnerships.

Engaging Content Creators for Ad Revenue Boost

In a recent announcement, Twitter shared plans to let select content creators to share in the ad revenue, a move aimed at attracting more creators to the platform and hopefully driving a resurgence in ad revenue.