The entrepreneur confirms that the company has a heavy debt burden and that the platform’s June revenue was not as expected.
Twitter has lost nearly half of its ad revenue since it was bought by entrepreneur Elon Musk for $44 billion in October 2022, the platform’s owner has revealed.
Musk said the company didn’t see the expected sales surge in June, but said July was “a little more promising.”
Musk laid off about half of Twitter’s 7,500 employees in a bid to cut costs when he took over the company in 2022.
Rival app Threads now has 150 million users, according to some estimates. The integrated connection to Instagram automatically gives access to the platform developed by Meta to two billion potential users.
Meanwhile, Twitter is facing a heavy load of debt. Cash flow remains negative, Musk said over the weekend, without setting a time frame for the result of a 50% drop in ad revenue.
In a tweet, he said, “We need to get cash flow positive before we can afford anything else.”
After laying off thousands of employees and cutting cloud-related costs, Musk said Twitter was on track to post $3 billion in revenue in 2023, down from $5.1 billion in 2021.
This is the latest sign that aggressive cost-cutting measures haven’t been enough to elicit a return from advertisers who have pulled out after changes to their content moderation rules.
This was despite an interview Musk gave to the BBC in April in which he suggested that most had returned to the platform.
However, Meghana Dhar, the former head of partnerships at Snap and Meta, the company that owns new Twitter competitor Threads, said the company had struggled before being acquired by Musk.
“Elon and Twitter are in a frankly difficult position right now,” he told the BBC’s Today programme.
“To be fair to Elon though, we have seen this decline in Twitter revenue and revenue growth since before Elon – there has been a steady decline.”
Lucy Coutts, chief investment officer at JM Finn, said: “You wouldn’t bet against him, he’s an unpredictable figure and I think he will probably turn the tables, but it will take longer.”
“But, unfortunately, it has $13 billion in debt to pay off by the end of July, so we could see more pressure on Tesla stock if it has to sell more (a portion) of its stake in that company.”
Musk is also the CEO and majority shareholder of electric car maker Tesla, which is expected to report its quarterly financial results this week.
Linda Yaccarino, a former head of advertising at NBCUniversal, took over as CEO of Twitter in June, a move that suggests ad sales are still a top priority for the company.
Yaccarino said Twitter plans to focus on business partnerships, videos and creators. Initial talks are said to be underway with figures from politics and entertainment, payment services, news and media.
Source: Terra
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