Twitter is still facing major financial challenges under its new owner Elon Musk, who said over the weekend that the company has yet to achieve positive cash flow.
In a tweet on Saturday, Musk revealed that Twitter’s ad revenue has plummeted nearly 50% as advertisers flee the platform. This exodus was triggered by concerns over controversial content and loose moderation policies promoted by Musk since his $44 billion acquisition last October.
“Need to reach positive cash flow before we have the luxury of anything else,” Musk stated in the tweet.
The evaporating ad revenue has exacerbated Twitter’s debt burden from the leveraged buyout, which stands at around $13 billion. Twitter must also make approximately $1 billion in annual interest payments on this debt, further straining its financial position.
Musk acknowledged that contrary to his previous predictions, Twitter did not see the expected bounce back in ad revenue in June. He did note July numbers are “a bit more promising.”
The billionaire tech mogul struck a decidedly less optimistic tone compared to April, when he projected Twitter would generate $3 billion in revenue for 2023, down from $5 billion in 2021. At the time, Musk also claimed that most advertisers had returned to the platform.
To reduce costs, Musk has laid off thousands of Twitter employees and slashed cloud computing expenses. But these measures may prove insufficient to make Twitter cash flow positive again. Finding new revenue streams through subscriptions, partnerships, or new products and services may be necessary.
Musk continues to make provocative statements on Twitter that alarm regulators, investors, and users. These remarks carry reputational and financial risks for a company already on shaky ground.
With competition from social media giants like Facebook and TikTok intensifying, Twitter faces deep challenges in boosting engagement and expanding its user base. Ongoing regulatory scrutiny and legal troubles related to content and privacy issues present additional hurdles.
Bringing Twitter to profitability and long-term growth will likely require Musk to take a more disciplined and strategic approach beyond just cost-cutting. With the company bleeding cash, he may need to temper his controversial behavior and stabilize Twitter’s deteriorating finances before his grand visions can become reality.
