Since Elon Musk purchased Twitter for $44 billion last October, the social media platform has experienced a nearly 50% decline in advertising revenue, according to its owner. Musk revealed that the expected increase in sales did not materialize in June, but July showed some signs of improvement.
Upon taking over Twitter in 2022, Musk implemented cost-cutting measures by laying off approximately half of the company’s 7,500 employees. However, Twitter continues to struggle with a significant debt load, and its cash flow remains negative.
In the meantime, rival app Threads, designed by Meta, has seen success with an estimated 150 million users. Its integration with Instagram gives it access to a potential user base of two billion individuals.
In a tweet, Musk wrote: “Need to reach positive cash flow before we have the luxury of anything else.”
Lucy Coutts, an investment director, believes Musk will be able to turn Twitter around, “but it is just going to take longer”. However, she expressed concern over Musk’s “$13bn of debt to pay by the end of July so we may see more pressure on the shares in Tesla if he has to sell more of his stake in that company.”
Despite the cost-cutting measures, Twitter has struggled to attract advertisers who left after changes were made to its content moderation rules. Musk previously suggested in an interview that most advertisers had returned to the platform, but Meghana Dhar, a former executive at Snap and Meta, stated that Twitter’s revenue decline was evident even before Musk’s buyout.
“Elon and Twitter are in a candidly tough position right now,” and “to be fair to Elon though, we’ve seen that decline in Twitter revenue and growth in revenue since pre-Elon – there’s been kind of a steady decline,” she told the BBC.
To address the advertising challenge, Linda Yaccarino, previously head of advertising at NBCUniversal, joined Twitter as its CEO in June. She plans to focus on video, creator, and commerce partnerships, and the company is reportedly in early talks with political and entertainment figures, payment services, and news and media publishers.
