In an unexpected tweet on Saturday, Elon Musk, the billionaire CEO of Twitter, openly admitted that the company is still grappling with negative cash flow issues. The revelation sheds light on the social media giant’s ongoing financial challenges, as it continues to spend more money than it generates. Musk attributed the problem to a sharp decline of approximately 50 percent in advertising revenue, coupled with a hefty debt burden that Twitter has been carrying.
Elon Musk stated that the 50-per cent decline in advertising revenue is to be blamed for the state of Twitter
The timing of Musk’s tweet is particularly significant, as it coincides with the commencement of Twitter’s ad-revenue sharing program paying out some content creators, including controversial far-right influencers. This move, though intended to bolster user engagement and attract advertisers, has been met with mixed reactions from the public.
Despite the setbacks, Musk seems to be optimistic about the platform’s potential. He claimed that Twitter could potentially witness an “all-time high device user seconds usage” in the coming week, indicating a strong user base. Moreover, Musk pointed out that many advertisers who had initially abandoned the platform following his takeover in October have either returned or expressed intentions to do so, signifying a potential resurgence in advertiser interest.
However, the numbers don’t paint an entirely positive picture for Twitter’s financial situation. A research firm, Sensor Tower, estimated that advertising spending on the platform experienced a staggering 89 per cent decline to a mere $7.6 million over a two-month period earlier in the year. Adding to the financial strain are the substantial annual interest payments of around $1.5 billion, resulting from the debt that Twitter accrued when Musk took the company private for $44 billion.
With these challenges on the table, Twitter’s newly appointed CEO, Linda Yaccarino, faces an uphill battle to rebuild the platform’s advertising base and steer the company towards a positive cash flow. Her leadership and strategic decisions in the coming months will be closely scrutinized as the company seeks to overcome its financial hurdles.
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(Via)
