Tesla CEO Elon Musk recently expressed concerns about Twitter’s financial state, attributing the company’s continued losses to a significant decline in advertising revenue and a substantial debt burden.
In response to a suggestion from a Twitter user about forming a consortium to acquire Twitter’s debt, Musk lamented the challenging financial position the company currently faces.
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In a tweet, Musk stated, “We’re still experiencing negative cash flow, primarily due to a roughly 50% drop in advertising revenue and our heavy debt load. Achieving positive cash flow is our primary focus before addressing other matters.”
Since acquiring Twitter for a staggering $44 billion last October, Musk has implemented sweeping changes within the company, including a drastic reduction of approximately 90% of the workforce.
However, the path to profitability remains arduous. The acquisition was financed through substantial borrowing, with interest payments alone estimated to reach approximately $1.5 billion annually, as reported by Reuters.
In May, Fidelity, an asset management firm, valued Twitter at just $15 billion, even before Meta launched Threads—a platform aiming to rival Twitter—pursued by Mark Zuckerberg.
Following Musk’s takeover, advertisers withdrew their support, resulting in a significant exodus of the platform’s major spenders.
Although Musk informed BBC News that advertisers had returned, an internal document shared with The New York Times in June revealed a nearly 60% drop in ad revenue.
This downturn aligns with a broader decline in online advertising, with numerous companies reducing their marketing expenditures.
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Additionally, Musk’s initiatives aimed at generating new revenue streams have yet to gain significant traction. For instance, Twitter Blue, a subscription-based service, only amassed $11 million in its first three months.
Similarly, the incentive program intended to attract creators to the platform and encourage Twitter Blue sign-ups by compensating users based on impressions appears unlikely to yield substantial changes in revenue.
Full Story Source: Elon Musk Reveals Twitter’s Ongoing Financial Struggles