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Twitter's Ad Revenue Plummets 50% under Musk, Struggling for Cash Flow
Updated: Dec 28, 2023
Elon Musk, the owner of Twitter, revealed a staggering 50% drop in advertising revenue since acquiring the platform for US$44 billion.
The social media giant faces financial challenges, with Musk emphasising the need for positive cash flow.
Despite attempts to reassure advertisers, changes made under Musk's leadership have alienated users and advertisers alike.
Elon Musk, owner of Twitter, discloses a significant decline in advertising revenue, losing nearly half of its value since his $44 billion acquisition in October. Responding to user suggestions on financing, the billionaire highlights negative cash flow resulting from this drop, combined with a heavy debt burden.
A recent report from Insider Intelligence predicts Twitter's earnings in 2023 to be less than US$3 billion, representing a one-third decrease compared to 2022. Musk's tenure at Twitter has been marked by efforts to reassure advertisers, addressing concerns about executive changes, layoffs and content moderation approaches. Previously banned high-profile users have been reinstated on the platform.
In April, Musk stated that most departing advertisers had returned, expressing optimism about potential positive cash flow in Q2. As part of his strategy, he brought on Linda Yaccarino, a seasoned executive with ties to the advertising industry, as the new CEO in May.
However, Musk's introduced changes have had negative consequences for both users and advertisers. Recent limitations imposed by Musk include a cap of 10,000 daily tweets for verified accounts, while non-verified users can only read up to 1,000 tweets per day. New unverified accounts are further restricted to 500 tweets. Additionally, Twitter plans to restrict access to TweetDeck, a popular multi-account monitoring tool, to verified users only starting next month.
The timing of Musk's changes aligns with the rapid growth of Threads, a competing app launched by Meta, Facebook's parent company. Within its first five days, Threads attracted over 100 million users. Twitter, with an estimated 200 million regular users, has experienced multiple technical failures since Musk's acquisition and the subsequent layoff of numerous employees.
Musk has publicly threatened legal action against Meta, accusing the company of intellectual property theft and misappropriation of trade secrets. However, Meta denies these allegations.
Elon Musk reveals Twitter's advertising revenue has halved under his ownership, leading to negative cash flow and a heavy debt load.
Insider Intelligence projects Twitter's earnings for 2023 to be less than $3 billion, a one-third decrease from the previous year.
Musk's efforts to reassure advertisers include reinstating previously banned high-profile users and appointing Linda Yaccarino as CEO.
Source: SCMP