CEO Elon Musk revealed that Twitter is struggling with negative cash flow as a result of a decline in advertising revenue of about 50% and a huge debt load.
According to CEO Elon Musk, according to CNBC, Twitter is experiencing negative cash flow as a result of a roughly 50% reduction in advertising revenue and a significant debt load. The acquisition of Twitter by Musk, who is also the CEO of SpaceX and Tesla, was valued at roughly $44 billion, including about $13 billion in debt. Musk traded shares of Tesla worth billions of dollars to pay for the transaction.
“Need to reach positive cash flow before we have the luxury of anything else,” Musk said, noting the financial challenges the social media giant is currently facing.
Following Musk's takeover, many advertisers cut back on or stopped all of their Twitter advertising. This was in response to Musk's decision to execute platform improvements, including the restoration of previously banned accounts, and to drastically reduce the number of employees at the company.
Musk maintained his optimism about the company's financial prospects despite these difficulties. In April, he claimed that “almost all” advertisers had started using Twitter again and that the business was “roughly breakeven,” with plans to start generating cash flow within the following three months.
These advertiser issues have resulted in a significant decline in Twitter's value. An internal memo revealed that just six months after the deal's closing, Musk's company valued Twitter at $20 billion less than the $44 billion he paid.
In a recent development, Twitter started giving some of its platform's content creators a share of its ad revenue. Leftists charged the firm with considerable prejudice in determining who received payouts because this revenue-sharing model was constrained in scope and only open to users who paid for a Twitter Blue verified subscription.
Insiders in the media sector are optimistic as a result of the hiring of Linda Yaccarino as CEO of Twitter. She previously oversaw worldwide advertising for Comcast's NBCUniversal. They think Yaccarino's skills could assist Twitter in addressing the current difficulties facing its ad business and guiding the business in the direction of a more stable financial future.