Elon Musk revealed on Twitter that Twitter is facing financial challenges due to a 50% decrease in advertising revenue and a large amount of debt. This is in contrast to Musk’s previous statement in April when he claimed that the platform was breaking even and most advertisers had returned.
The billionaire owner tweeted Saturday, in response to business advice from a follower, “Need to reach positive cash flow before we have the luxury of anything else.”
The drop in ad revenue is a result of many advertisers leaving the platform after Musk took over. They were concerned about content moderation, layoffs, and the uncertain future of Twitter. To address these issues, Linda Yaccarino, a former NBCUniversal marketing executive, has taken over as CEO, and Musk is relying on her advertising expertise to attract advertisers back.
According to The New York Times, Twitter’s US advertising revenue during a five-week period from April to May decreased by 59% compared to the previous year. Data from market intelligence firm Sensor Tower also revealed that only 43% of Twitter’s top 1,000 advertisers in September were still advertising on the platform in April.
“It’s definitely been extremely difficult,” Musk said in Twitter Spaces livestream event Musk hosted with Robert F. Kennedy, Jr last month. “Basically, our revenue is cut in half because we didn’t toe the line.” He added it’s been a “huge struggle for Twitter to break even.”
Furthermore, Twitter faces increased competition from Meta’s Threads app, which gained over 100 million downloads shortly after its launch. To mitigate the financial situation, Musk has implemented various measures such as offering Twitter Blue memberships with blue checkmarks and putting Tweetdeck behind a paywall.
Recently, Twitter announced that content creators could earn a share of the platform’s ad revenue to attract more creators. However, this move has faced criticism as it includes creators like Andrew Tate, who has a controversial background and is facing serious charges in Romania.
Overall, Twitter is working to overcome its financial difficulties and regain advertisers’ trust while facing increasing competition from other platforms.