Elon Musk revealed on Saturday that Twitter is still facing negative cash flow due to a significant decline of nearly 50 percent in advertising revenue along with substantial debt obligations. This situation deviates from Musk’s prior prediction made in March, indicating that Twitter could achieve cash flow positivity by June.
“We must attain positive cash flow before we can explore other options,” Musk stated in a tweet, responding to proposals regarding recapitalization efforts.
The ongoing financial struggles highlight that the aggressive cost-cutting measures implemented since Musk took over Twitter in October have not been sufficient to reverse the company’s financial trajectory. It appears that Twitter’s advertising revenue has not rebounded as quickly as Musk suggested during an April interview with the BBC, where he mentioned that most advertisers had returned to the platform.
Musk has noted that the company has successfully reduced its non-debt expenditures to $1.5 billion (approximately Rs. 12,300 crore) from an anticipated $4.5 billion (around Rs. 37,000 crore) for the year. However, Twitter is also burdened with annual interest payments close to $1.5 billion (around Rs. 12,300 crore) due to the debt incurred from the $44 billion (approximately Rs. 3,61,400 crore) acquisition that transitioned the company into private ownership.
The timeframe Musk referred to concerning the 50 percent plunge in ad revenue remains unclear. He did mention that Twitter aims to generate $3 billion (approximately Rs. 24,600 crore) in total revenue for 2023, a notable decrease from the $5.1 billion (around Rs. 41,900 crore) recorded in 2021.
The platform has faced backlash for its inadequate content moderation, leading to many advertisers withdrawing their support to avoid their ads appearing alongside inappropriate material.
The appointment of Linda Yaccarino, former advertising chief at Comcast’s NBCUniversal, as CEO underscores the importance of revitalizing ad sales for Twitter, even as the organization looks to enhance subscriptions.
Since joining Twitter in early June, Yaccarino has indicated that the company will focus on developing partnerships in video, creator content, and commerce, while also engaging with political and entertainment figures, as well as news and media organizations.
On Thursday, Twitter announced that selected content creators would be eligible to share in the advertising revenue generated by the platform, a strategy aimed at attracting more creators to the site.
© Thomson Reuters 2023
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