Since Elon Musk took over as CEO of Twitter, the company has seen a loss of over half of its advertising revenue.
It was revealed by Twitter’s owner, Elon Musk, that the company has lost roughly half of the money it makes from advertising after it was purchased by Musk for $44 billion (or £33.6 billion) last October.
He stated that the business wasn’t seeing the boost in profits that had been anticipated for the month of June, but he remarked that July had looked “a little bit more hopeful.”
When Mr. Musk assumed control of Twitter in 2022, he immediately began a cost-cutting initiative by firing around half of the company’s 7,500 employees.
Some estimates put the number of users of the competing app Threads at 150 million at this point.
The platform that was established by Meta has an in-built connection to Instagram, so it automatically has access to Instagram’s potential user base of two billion people.
Twitter is having trouble managing cash flow
In the meantime, Twitter is having trouble managing its substantial amount of debt. Mr. Musk stated over the weekend that the company is still operating with a negative cash flow, despite Mr. Musk did not provide an exact date for the decline in revenue from ads of 50%.
He posted the following message on Twitter: “The development to achieve a cash surplus prior to we gain the pleasure of everything extra.”
Mr. Musk stated that Twitter remained on pace to earn earnings of $3 billion (£2.29 billion) in 2023, compared to $5.1 billion in 2021, after the company laid off countless staff and reduced its bills for its cloud-based services.
This recent development is more evidence that the extreme cost-cutting efforts implemented by the company have not been sufficient to entice a revival of ads who left the company after revisions were made to its material filtering standards.
This is notwithstanding the fact that Mr. Musk stated that the majority of people had come back to the site in a conversation that he delivered on the BBC in April.
Having trouble before Musk bought it out
Nevertheless, Meghana Dhar, previously the director of relationships at Snap and Meta, the business that controls the new Twitter competitor Threads, stated that the organization started having trouble before Mr. Musk bought it out.
“The guy and Twitter are in a genuinely difficult situation at the moment,” she said on the Today program of the BBC. “We want to be honest to the CEO, although, we have witnessed a decrease in Twitter earnings and an increase in income from pre-Elon – there is some type of an ongoing continuous decline,”
“I think you wouldn’t place a wager upon his condition, he’s something of volatile figure,” said Lucy Coutts, investing manager at JM Finn. “I believe likely he can turn it back, though it is going continue for longer.”
But regrettably, he has $13 billion in debt to pay by the end of July, so we may see additional pressure on his investments in Tesla if he must liquidate more of his investment in that firm. This might happen if he is forced to sell more of his stock in that company.
Mr. Musk also serves as the chief executive officer and the main shareholder of the electric car manufacturer Tesla, which is scheduled to release its most recent quarterly earnings report on Wednesday.
It was announced in June that Linda Yaccarino, who had most recently served as the president of advertising sales at NBCUniversal, would be taking over as chief executive of Twitter. This decision indicates that advertising sales will continue to be a focus for the company.
According to Ms. Yaccarino, Twitter intends to place a greater emphasis on video, creative, and commerce collaboration opportunities. It is reported that preliminary discussions are taking place with governmental and showbiz personalities, financial institutions, and editors of the news and publications.