Since Elon Musk’s acquisition of Twitter for $44 billion last October, the social media platform has experienced a significant drop in advertising revenue, losing nearly half of its previous earnings.
The anticipated sales boost in June did not materialize as expected, although Musk expressed some optimism for July.
To reduce costs, Musk implemented drastic measures upon taking over in 2022, resulting in the dismissal of approximately half of Twitter’s workforce, which consisted of 7,500 employees.
However, despite these efforts, the platform is grappling with heavy debt and negative cash flow, prompting Musk to prioritize achieving positive cash flow before pursuing other endeavors.
In contrast to Twitter’s struggles, rival app Threads, with an estimated 150 million users, has emerged as a strong competitor.
The Meta-designed platform’s integration with Instagram grants it access to a potential user base of two billion individuals.
Twitter’s financial challenges persist despite Musk’s interview with the BBC in April, where he claimed that most advertisers had returned to the platform following changes to its content moderation rules.
The decline in revenue and lack of advertiser interest predates Musk’s acquisition, according to industry insiders.
While Musk remains a formidable figure capable of turning the situation around, Lucy Coutts, an investment director at JM Finn, acknowledges the arduous path ahead.
With $13 billion in debt due by the end of July, potential pressure on Tesla’s shares looms if Musk is forced to sell more of his stake in the company.
In an effort to revive Twitter’s fortunes, Linda Yaccarino, former head of advertising at NBCUniversal, assumed the role of CEO in June. This appointment underscores the company’s ongoing commitment to advertising sales.
Yaccarino has outlined plans to focus on video, creator and commerce partnerships, as well as engaging with political and entertainment figures, payments services, and news and media publishers, although these discussions are in their early stages.