Elon Musk on Saturday said that Twitter is facing a negative cash flow issue since about 50% of the advertising revenue is lost. Also, the company’s debt payments are thumping the financials further down.
Both these reasons spurred after Elon Musk’s takeover, but the new boss is optimistic about Twitter’s future. He says the platform could see an “all-time high device user seconds usage” sometime this week, while most advertisers who left earlier said they’ll soon come back.
Failing Bad, Yet Optimistic
Twitter has a lot of problems. And one among them is Elon Musk! The billionaire’s dramatic takeover of the social media platform has triggered everyone in the tech community, with Twitter’s advertisers shaking the most.
Weeks after acquiring Twitter, Musk reinstated the accounts of some controversial figures, dumped the media team, and significantly reduced teams working on preventing hate speech. This aside, cutting more than half of Twitter’s employees and cancelling some important benefits of the existing ones.
All these are hitting Twitter so hard that the company is now suffering from a negative cash flow issue, says Elon Musk. The social media company is stuffed into a huge debt ruining its cash flows for months. As per Reuters, Twitter has annual interest payments of about $1.5 billion – procured to finance the $44 billion acquisition deal Musk made last year.
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
This aside, advertising spending fell by 89% to $7.6 million during months earlier this year. This may have been slightly improved, but it still stands at a 50% drop in ad revenue, says Elon Musk. While it’s still bothering, Musk is optimistic about the social network’s rise, gradually.
He opined the platform could see an “all-time high device user seconds usage” sometime this week, while most advertisers who had left Twitter following his takeover had “either come back” or “said they will come back.”