Twitter has reported a significant decline in advertising revenue since its acquisition by Elon Musk in October 2022. The social media platform has witnessed a nearly 50% drop in ad revenue, failing to meet the sales expectations set for June. Despite a more promising outlook for July, the company continues to struggle financially. Musk’s cost-cutting measures, which included laying off half of Twitter’s workforce, have not been sufficient to attract advertisers back to the platform.
In contrast, rival app Threads, designed by Meta, now boasts 150 million users and has the advantage of automatic access to Instagram’s two billion users. Twitter, on the other hand, faces mounting debt and negative cash flow. Musk emphasized the need to achieve positive cash flow before pursuing any other strategies. The company’s projected revenue for 2023 is $3 billion, a decline from $5.1 billion in 2021.
The decline in ad revenue is a setback for Twitter, as the platform has been grappling with the departure of advertisers following changes in its content moderation rules. Despite Musk’s previous claims that most advertisers had returned, the reality has proven otherwise. Experts in the industry have noted Twitter’s declining revenue even prior to Musk’s acquisition, indicating a continuous downward trend.
Twitter’s newly appointed CEO, Linda Yaccarino, aims to revitalize the platform’s advertising sales by focusing on video, creator, and commerce partnerships. The company is currently in discussions with political figures, entertainment personalities, payments services, and news and media publishers. However, Musk’s $13 billion debt obligation by the end of July adds further pressure to the situation.
While some remain optimistic about Musk’s ability to turn Twitter around, others foresee a longer road to recovery. Musk, who also heads Tesla, has a history of navigating challenging situations, but the success of his endeavors may take more time than anticipated. The upcoming quarterly financial results for Tesla will provide further insight into Musk’s business performance.
