Twitter’s advertising revenue has experienced a significant decline of almost 50 percent since Elon Musk purchased the company for $44 billion in October last year, revealed the tech mogul.
Musk admitted that sales in June did not meet the anticipated increase but expressed some optimism for July.
In an effort to cut costs, Musk terminated approximately half of Twitter’s 7,500 employees upon assuming control in 2022.
Amidst Twitter’s struggles, rival app Threads has reportedly amassed 150 million users, bolstered by its integration with Instagram and access to a potential two billion users via Meta’s platform.
Conversely, Twitter is burdened by a substantial debt load, with negative cash flow, as disclosed by Musk. While the billionaire did not specify a timeframe for the 50 percent drop in ad revenue, he emphasized the need to achieve positive cash flow before pursuing other endeavors.
Lucy Coutts, investment director at JM Finn, expressed belief in Musk’s ability to turn Twitter around but acknowledged that it might take longer than expected. However, she also noted that Musk faces a significant debt repayment of $13 billion by the end of July, which could result in added pressure on Tesla’s shares if he is forced to sell more of his stake in the company. Musk serves as CEO and majority shareholder of Tesla, which is due to release its latest quarterly financial results on Wednesday.
Despite layoffs and reductions in cloud service expenses, Twitter continues to struggle to attract advertisers who departed following changes to its content moderation rules. Industry insiders, such as Meghana Dhar, former head of partnerships at Snap and Meta, pointed out that Twitter had been facing challenges even prior to Musk’s acquisition, with a steady decline in revenue over time.
To address these challenges, Linda Yaccarino, former head of advertising at NBCUniversal, was appointed as Twitter’s CEO in June, indicating that advertising sales remain a priority for the company. Yaccarino has outlined plans for Twitter to focus on video, creator and commerce partnerships, and has initiated discussions with political and entertainment figures, payments services, as well as news and media publishers.
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