Despite efforts, Twitter’s cash flow continues to suffer, primarily due to a drastic 50% decline in advertising revenue and a burdensome debt load. Elon Musk expressed disappointment on July 15, acknowledging that the app failed to meet his expectations set in March
. However, Musk expressed optimism and hoped that Twitter could achieve a positive cash flow status by June. This setback emphasizes the challenges faced by Twitter in restoring its financial stability and highlights the importance of implementing effective strategies to generate revenue and reduce its debt burden.
“Need to reach positive cash flow before we have the luxury of anything else,” Musk said in a tweet replying to suggestions on recapitalization.
Amidst growing competition between the platform and Mark Zuckerberg’s rival Threads, Elon Musk’s statement arrives at a crucial time. Twitter’s recent move to pay creators for advertisements adds another layer to the intensifying competition between the two platforms.
This is the latest sign that the aggressive cost-cutting measures since Musk acquired Twitter in October are not enough to get Twitter to cash flow positive, and suggests Twitter’s ad revenue may have not recovered as fast as Musk suggested in an interview in April.
After laying off thousands of employees and cutting cloud service bills, Musk had said the company reduced its non-debt expenditures to $1.5 billion from a projected $4.5 billion in 2023. Twitter also faces annual interest payments of about $1.5 billion as a result of the debt it took on in the $44 billion deal that turned the company private.
The timeframe Elon Musk was referring to regarding the 50% decrease in ad revenue remains unclear. He previously mentioned that Twitter’s revenue projection for 2023 is $3 billion, down from $5.1 billion in 2021.
Twitter has faced criticism for its inadequate content moderation, leading to the departure of several advertisers who did not want their ads showcased alongside inappropriate content.
Musk’s appointment of Linda Yaccarino indicates that Twitter considers ad sales a priority, even as it strives to boost subscription revenue.
Currently, Threads, a rival platform to Twitter, does not have any advertisements on its platform and therefore is not competing with Twitter for revenue. However, despite this, there has been interest from some advertising firms.
As of Monday morning, Threads has reached an impressive milestone of 100 million users, making it the fastest-growing platform in history. Sensor Tower reports that Threads also had a highly successful app launch, with over 40 million downloads on July 6, making it the most successful app launch in the last decade.
Twitter announced on Thursday that it will be offering a share of its ad revenue to select content creators as an incentive to attract more creators to the site. This means that content creators will have the opportunity to earn money by posting advertisements on the platform.
Starting this week, Twitter has already begun paying content creators for their advertisements, with some users reporting earning over $10,000 from these payouts.
