Since Elon Musk’s $44 billion takeover last October, Twitter has seen its advertising income nosedive. Musk himself recently confirmed the platform’s dire financial straits.
In a tweet, the billionaire stated that Twitter’s ad revenue has dropped approximately 50% since his acquisition. This has kept the company stuck in negative cash flow despite Musk’s efforts to revitalize the platform.
“We are still in a deep negative cash flow situation due to an approximately 50% drop in advertising revenue and massive debt load,” Musk tweeted on Saturday.
What’s Causing the Ad Exodus?
Musk has made several controversial changes since assuming ownership that likely triggered the ad decline.
He laid off over half of Twitter’s staff, upsetting advertisers who want workforce stability. Musk also introduced a $7.99 verification system that undermined Twitter’s previous ID confirmation standards.
These updates diminished advertiser trust in the platform. Many companies paused campaigns over content moderation concerns or unwillingness to be associated with Musk’s vision.
Without detailing specifics, Musk stated Twitter needs to reach positive cash flow before pursuing other plans. But winning back advertisers presents a formidable challenge.
Rival App Threads Emerges as Threat
Twitter also faces its first major competitor in Threads, a new app from Meta.
Threads mimics Twitter’s interface and has already attracted over 100 million users since launching on July 5. While still dwarfed by Twitter’s user base, Threads benefits from integration with Meta’s popular Instagram app.
In response, Musk accused Meta of stealing Twitter’s intellectual property and recruiting former employees. However, Meta denies these allegations of IP theft.
Key Takeaways
- Twitter’s ad revenue has dropped ~50% under Elon Musk, causing ongoing negative cash flow.
- Controversial changes like mass layoffs likely triggered the ad decline.
- Twitter now competes with the fast-growing Threads app launched by Meta.
- Musk claims Meta infringed Twitter IP and poached employees.
With ad dollars drying up, Twitter faces deep uncertainty in its finances and competitive standing. Musk continues seeking new ways to revive usage and trust in the beleaguered platform. But his polarizing tenure has so far repelled advertisers rather than attracting them.
