Elon Musk: Twitter Struggling with Negative Cash Flow After 50% Drop in Advertising

Twitter is grappling with negative cash flow due to a nearly 50 percent drop in advertising revenue and a significant debt burden, according to CEO Elon Musk.

CNBC reports that according to CEO Elon Musk, Twitter is struggling with negative cash flow as a result of a roughly 50 percent decline in advertising revenue and a huge debt load. Musk, who also serves as the CEO of SpaceX and Tesla, took over Twitter in a deal valued at around $44 billion, which included about $13 billion in debt. To finance the acquisition, Musk sold billions of dollars worth of his Tesla shares.

We’re still negative cash flow, due to ~50% drop in advertising revenue plus heavy debt load. Need to reach positive cash flow before we have the luxury of anything else.

— Elon Musk (@elonmusk) July 15, 2023

“Need to reach positive cash flow before we have the luxury of anything else,” Musk stated, highlighting the financial challenges the social media giant is currently facing.

Following Musk’s takeover, numerous advertisers reduced or completely halted their ad spending on Twitter. This was in response to Musk’s decision to make steep staff cuts at the company and implement changes to the platform, including restoring previously banned accounts and altering its approach to content moderation.

Despite these challenges, Musk remained optimistic about the company’s financial future. In April, he stated that “almost all” advertisers had resumed buying ads on Twitter, and that the company was “roughly breakeven,” with expectations to become cash flow positive within the next quarter.

Twitter’s value has dropped sharply due to these advertiser problems. An internal memo showed Musk’s organization valued Twitter at $20 billion less than the $44 billion he paid just six months after the deal closed.

In a recent development, Twitter began sharing a portion of its ad revenue with select content creators on its platform. However, this revenue-sharing program was limited in scope and only available to users who paid for a Twitter Blue verified subscription and leftists accused the company of significant bias in which individuals received payouts.

The appointment of Linda Yaccarino, who previously ran global advertising for Comcast’s NBCUniversal, as Twitter’s CEO has ignited hope among media industry insiders. They believe that Yaccarino’s expertise could help Twitter address the immediate challenges to its ad business and steer the company towards a more financially stable future.

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