Elon Musk confesses that Twitter revenues have fallen by half
Elon Musk said Twitter is still losing money, stating that it is under 'heavy debt' and advertising revenue is low. Musk, who bought Twitter for 44 billion dollars last year, could not fill the gap by making the blue tick paid.
Twitter still spends more money than it makes, according to Elon Musk. The billionaire noted that the company has an ongoing 'negative cash flow' problem due to a nearly 50 percent drop in advertising revenue and a heavy debt load. "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," Musk said. The admission came as Twitter began paying some creators through its ad revenue sharing program.
Twitter owner Musk also claimed that the social network could see "all-time high device user-second usage" sometime this week. He has also previously said that nearly all advertisers who left the platform after his acquisition in October have "either come back or said they're coming back."
TWITTER LOSES MONEY
Advertising spending fell 89 percent to $7.6 million in the two-month period earlier this year, according to data shared with Bloomberg by research firm Sensor Tower. Musk's purchase of the company was made with a large amount of borrowing, with interest payments alone estimated at around $1.5 billion a year.
After buying the company, Musk laid off more than 60 percent of the employees and ended various services such as lunch, but all these measures to reduce the cost of Twitter do not seem to be enough to put the company on a solid financial footing.
On the other hand, the financial firm Fidelity claimed in May that Twitter was worth only $15 billion.
While Musk said advertisers were returning, an internal document shared with The New York Times in June showed that advertising revenues had dropped by almost 60 percent. In the first three months of Twitter Blue, the subscription service Musk launched to monetize Twitter with paid blue tick sales, the company earned just $11 million. The social media giant is trying to get users and accounts with many followers to subscribe to Blue. But it's unclear whether its new ad revenue sharing program, which pays content creators based on the number of views on videos, will work as well.
Source: Engadget, Insider
