Despite sending out a block payment of around $5 million to certain creators as part of Twitter's new ad-revenue sharing program, Elon Musk's platform is dealing with money problems.
The social media app's revenue has fallen since Musk took over, and ad spending on Twitter has fallen by more than 50% in the past year.
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Musk himself just admitted to the ongoing fiscal challenges the platform is facing.
"We’re still negative cash flow, due to ~50% drop in advertising revenue plus heavy debt load," the billionaire tweeted July 15. "Need to reach positive cash flow before we have the luxury of anything else."
Twitter's revenue, according to estimates from the Bay Area Times, has fallen from $5.1 billion in 2021 to $4.4 billion in 2022. Musk estimated in December that revenue for 2023 will be around $3 billion.
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 drop comes despite claims by Musk in an April interview with the BBC that "almost all advertisers have come back." He added at the time that profitability was coming soon to Twitter, saying: "We could be profitable, or to be more precise, cash flow positive this quarter if things keep going well."
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Twitter, according to the New York Times, took in only $88 million in advertising revenue between April 1 and the first week of May. This amount was down nearly 60% from last year. Twitter's new CEO, Linda Yaccarino, is working to bring these advertisers back to the platform. Yaccarino, who started June 5, is reportedly working on several measures to accomplish this, including the introduction of video ads to the platform, according to the Financial Times.
"We did not see the increase in advertising revenue that was expected in June," Musk tweeted July 16. "July is a bit more promising."
Musk, who said July 14 that platform usage is up "3.5% week-over-week" amid reported traffic declines, further promised that Twitter will soon begin to "share ad revenue from profile page views, which should roughly double payouts."
Yeah
— Elon Musk (@elonmusk) July 16, 2023
A class action lawsuit was filed against Twitter last week alleging a failure to pay at least $500 million in severance pay, an additional twist to Twitter's ongoing debt and negative cash flow problems.
