Elon Musk has admitted that Twitter has now lost around half of its ad revenue since his highly-publicised takeover of the social media platform in October last year.
This latest blow comes only weeks after Mark Zuckerberg’s Meta launched rival text-based app Threads, which now counts 115 million users wordwide, rapidly catching up with Twitter’s 535 million.
Since Musk’s takeover, Twitter’s long-term viability as an advertising platform has repeatedly been called into question after he reinstated controversial banned users, made changes to content moderation and introduced a new paid-for-verification option which led to millions of ‘fake official’ parody accounts flooding the app.
Now heavily saddled with US$13 billion of debt requiring annual interest payments of $1.5 billion, the overall stability of Twitter’s entire business model is now being questioned.
Speaking to the BBC’s Today Programme, JM Finn investment director, Lucy Coutts said that Musk might be able to turn the platform’s fortunes around but that it was “just going to take longer”.
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“But unfortunately he has got $13bn of debt to pay by the end of July so we may see more pressure on the shares in Tesla if he has to sell more of his stake in that company.”
Tweeting in reply to a user offering him advice on how to deal with the debt burden, Musk wrote: “We’re still negative cash flow, due to ~50% drop in advertising revenue plus heavy debt load. Need to reach positive cash flow before we have the luxury of anything else.”
We’re still negative cash flow, due to ~50% drop in advertising revenue plus heavy debt load. Need to reach positive cash flow before we have the luxury of anything else.
— Elon Musk (@elonmusk) July 15, 2023
Having introduced a series of aggressive cost-cutting measures since his takeover, such as sacking around half of Twitter’s 7,500 staff, it would appear that Musk is at a crossroads. He will no doubt be hoping that his recent appointment of Linda Yaccarino as CEO will help steady the ship and kickstart growth.
“Elon and Twitter are in a candidly tough position right now,” former head of partnerships at Snap and Meta, Meghanna Dhar told the BBC.
“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.”
