Twitter’s cash flow remains negative because of a nearly 50% drop in advertising revenue and a heavy debt load, Elon Musk said on Saturday, falling short of his expectation in March that Twitter could reach cash flow positive by June, Reuters reported.
“Need to reach positive cash flow before we have the luxury of anything else,” Musk said in a tweet, replying to suggestions on recapitalization.
According to Reuters, this is the latest sign that the aggressive cost-cutting measures since Musk acquired Twitter in October alone are not enough to get Twitter to cash flow positive, and suggests Twitter’s ad revenue may have not recovered as fast as Musk suggested in an interview in April with the BBC that most advertisers had returned to the site.
CNBC reported that by January, hundreds of advertisers had reduced or halted their ad spending on Twitter in response to Musk making steep staff cuts at the company, and implementing changes to the platform, especially restoring previously banned accounts and changing its approach to content moderation.
In April, Musk told a BBC reporter that “almost all” advertisers had resumed buying ads on Twitter. He also claimed at the time that the company was “roughly breakeven,” and expected to become cash flow positive within the next quarter, CNBC reported.
According to CNBC, his statement about Twitter’s cash flow problems today comes a little over one month since Linda Yaccarino, who previously ran global advertising for Comcast’s NBCUniversal, took on the role of Twitter CEO. NBCUniversal is the parent company of CNBC.
In recent days, Twitter began doling out a share of its ad revenue to select content creators on its platform. Musk’s remarks were made in response to followers who wanted to know why that revenue-sharing program was so limited in scope.
Mint asked “Why are advertisers avoiding Twitter?” According to Mint, Elon Musk added that Twitter is set to post $3 billion in revenue which is a significant drop from the $5.1 billion in 2021. The advertisers turned their faces away from Twitter after it relaxed its approach to content moderation. The advertisers expressed skepticism about their advertisements appearing around inappropriate content.
Engadget reported Elon Musk’s admission that Twitter has negative cash flow comes the same week that Twitter’s ad-revenue program began paying out some creators, including far-right influencers. On Friday, Musk claimed the social network could see “all-time high device user seconds usage” sometime this week. He also previously said almost all the advertisers who had left the platform following his takeover in October had “either come back” or “said they will come back.”
Personally, I know I have seen a bunch of very strange ads on Twitter. Most of them appear to be hoping people will buy things that don’t seem to have much of a use, or are potentially harmful. There is an ad that shows a grill that someone has tossed a plastic-looking mesh bag full of cut vegetables on. The only ads I’ve seen from big name brands are the ones that precede videos from a sports team.