Twitter Struggles with Negative Cash Flow and Declining Ad Revenue

New York (AP) – Elon Musk, the billionaire owner of Twitter, revealed on Saturday that the platform is facing a challenging financial situation. In a tweet, Musk cited a 50% drop in advertising revenue and a heavy debt load as the main factors contributing to the negative cash flow. He acknowledged that reaching positive cash flow is a necessity before addressing any other issues.

This recent statement from Musk is a significant departure from his optimistic tone in April when he claimed that Twitter was “roughly breaking even” and that most advertisers had returned to the platform. However, following Musk’s takeover, the site experienced an exodus of advertisers due to concerns about content moderation, mass layoffs, and uncertainty surrounding Twitter’s future.

To address the declining ad revenue, Musk appointed Linda Yaccarino, a former NBCUniversal marketing executive, as the new CEO. This move aims to leverage her advertising expertise and win back advertisers to the platform.

According to a report by The New York Times, Twitter’s US advertising revenue from April 1 to the first week of May dropped by 59% compared to the same period the previous year. The report also mentioned that only 43% of Twitter’s top 1,000 advertisers as of September continued to advertise on the platform by April, indicating the significant impact of the mass departure of advertisers.

During a recent Twitter Spaces livestream event hosted by Musk and Robert F. Kennedy Jr., Musk admitted that the company’s revenue has been cut in half because it didn’t “toe the line.” He described the struggle to break even as a monumental task for Twitter.

As if the challenges weren’t enough, Twitter also faces increased pressure from Meta’s Threads, a rival app that surpassed 100 million downloads within a week of its launch. This puts Twitter under additional scrutiny and highlights the urgency for the platform to revamp its advertising strategies.

In an effort to improve its financial situation, Musk has implemented cost-cutting measures. These moves include giving blue checkmarks with a Twitter Blue membership and putting Tweetdeck, a popular Twitter tool, behind a paywall. Additionally, Twitter recently announced that content creators can now earn a share of the ad revenue. However, to be eligible, creators must have Twitter Blue and achieve at least 5 million impressions on their posts each month.

Amidst Twitter’s monetization efforts, it came to light that one of the creators benefiting from the new ad revenue program is Andrew Tate. Tate, a self-proclaimed “misogynist” online influencer, was indicted in Romania on charges of human trafficking, rape, and setting up a criminal gang. This revelation raises concerns about Twitter’s vetting process for eligible creators.

CNN reached out to Twitter for comment regarding its financial challenges, but no response was received.

Overall, Twitter’s negative cash flow and declining ad revenue pose significant hurdles for the platform. With new leadership and a focus on attracting advertisers and content creators, Twitter aims to regain its financial footing and overcome the increasing competition in the social media landscape.