Elon Musk said on Saturday that Twitter’s cash flow is negative due to a nearly 50% fall in advertising revenue. This comes after Musk’s $44bn takeover last October, following which by December half of Twitter’s top 100 advertisers dropped the platform completely.
Musk needs to ensure Twitter achieves positive cash flow in order to “have the luxury of anything else”. He has previously attempted to cut back costs by firing around half of Twitter’s staff when taking over and introducing new features.
His attempts have been widely scrutinised and criticised. The firing of nearly half of Twitter’s staff and the mistreatment of the remaining employees was largely controversial, especially through his methods, which many deemed unempathetic.
Moreover, his attempts to create new streams of income, such as implementing a subscription-based blue check system on Twitter, were largely met with dissent from users. The blue tick was formerly attributed to verifying official accounts and disseminating information on the platform, such as government officials and journalists.
Users who were previously awarded the tick and chose to not pay for it were stripped of it, leading to informational chaos that has even been accused of fuelling misinformation around the Ukraine War
However, since Musk introduced a paid service to gain a blue tick, altering the previous “corrupt and nonsensical system” as he called it, allowing anyone who paid for a tick to get it. Users who were previously awarded the tick and chose to not pay for it were stripped of it, leading to informational chaos that has even been accused of fuelling misinformation around the Ukraine War.
The cost-cutting moves reduced Twitter’s non-debt expenditures by 2/3, to $1.5bn. Still, Twitter predicts that it will earn $3bn of revenue in 2023, nearly half the $5.1bn revenue it enjoyed in 2021. June saw Musk onboarding Linda Yaccarino, former advertising executive at NBCUniversal, as CEO of Twitter. She has told investors that Twitter will focus on video, creator and commerce partnerships in order to “revitalize the social media company’s business beyond digital advertising”.
Advertising sales remains, thus, a priority income stream for Twitter as it fights for its audience share. Advertisers were previously scared off after a change in Twitter’s rules following Musk’s takeover that made content moderation on the platform much more lax.
Most companies who initially paused advertising on Twitter have now returned, including Warner Bros, McDonald’s and Walmart. According to Yaccarino, ad spending in several advertiser categories is up at least 40% year-over-year. The former Fox News star Tucker Carlson launched a new show on the platform called “Tucker on Twitter”.
Musk has even threatened to sue Zuckerberg over the intellectual property theft, unless the two battle it out beforehand in the widely debated cage match
Twitter has recently fallen under threat from Meta’s new platform, Threads, an eerily similar platform. Musk has even threatened to sue Zuckerberg over the intellectual property theft, unless the two battle it out beforehand in the widely debated cage match. Threads has seen the fastest growing sign-up rates in history, gaining 100 million sign-ups in its first five days. However, the platform is still in its early stages.
Redeeming for Musk is only that Twitter’s demise is not entirely traceable to his takeover. “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” said Meghana Dhar, a former Snapchat and Meta executive.