Twitter owner Elon Musk has now said that the company is still losing cash. His comments come barely two months after he claimed to have performed a “major open-heart surgery” on the social media company to make it viable.
Responding to a tweet about recapitalization, Musk said, “We’re still negative cash flow, due to (about a) 50% drop in advertising revenue plus heavy debt load.”
The billionaire added, “Need to reach positive cash flow before we have the luxury of anything else.”
Musk says Twitter is losing cash
Notably, previously Musk said that Twitter is on track to hit $3 billion in revenues in 2023 which is way below the $5.1 billion that the company reported in 2021 – the last full financial year before Musk took it private in October 2022.
Musk has taken several cost-cut actions since he acquired Twitter – including lowering the headcount by almost 80%. Many of the former employees have sued Twitter, including over unpaid legal bills.
The company is also facing lawsuits from landlords, vendors, and consultants over unpaid bills.
Musk has been on a cost-cutting spree and has taken aggressive actions to lower the company’s cost base including shutting down some offices.
Musk previously said that because of these actions, Twitter’s non-interest expenses in 2023 would be around $1.5 billion – $3 billion lower than what they would have been otherwise.
Separately, Twitter has a debt load of $13 billion which Musk took to finance the $44 billion acquisition.
Musk said he performed an “open heart surgery” on Twitter
At Tesla’s shareholder day in May, Musk admitted that Twitter has been a “short-term distraction” but added that he needed to do a “major open-heart surgery” on the social media company to make it viable.
Musk has made several changes at Twitter including the pivot to paid verifications. However, he now seems to have changed his thoughts on advertising. It became apparent when he hired NBC Universal advertising executive Linda Yaccarino to lead Twitter.
Recently, Twitter has started sharing revenues with some content creators on the platform.
Musk has admitted that things have been tough
According to Sensor Tower, only about 43% of the top 1,000 advertisers as of September were still advertising on the platform in April. Musk’s antics including his restoring multiple banned accounts spooked many advertisers. The alleged increase of hate speech on the platform hasn’t helped matters either.
When Musk acquired Twitter, he said that as a “free speech absolutist” he intends to promote free speech. However, under Musk, the platform has readily agreed to requests from countries like India and Turkey to block several accounts.
While Twitter’s ad revenues have plummeted, the company has started charging for account verification in order to diversify its revenue base. The company charges $8 monthly if the subscription is taken on the web and $11 monthly if the subscription is taken on Google and Apple app stores.
The pivot to a subscription-based business failed badly and Musk subsequently restored the blue ticks for all celebrities even if they had not paid for the service.
Twitter valuation is down sharply
Musk now slashed the company’s valuation by over half to $20 billion. He said the company’s valuation could eventually rise to $250 billion.
Other Twitter investors have also marked down the social media company’s valuation and last month Fidelity lowered the valuation for the third time to a mere $15 billion.
Even Twitter’s co-founder Jack Dorsey, who backed Musk’s acquisition and continued to remain an investor in the company, has criticized Musk’s handling of Twitter and said that he’s not the right leader to lead the company.
Dorsey has incidentally launched his own social media platform Bluesky. However, while there are several other platforms trying to compete with Twitter, Instagram’s Threads could be the biggest threat to the Elon Musk-owned company.
Threads can change the social media landscape
Threads surpassed 100 million users in five days and became the fastest app to reach that milestone. To put that in perspective, the popular generative AI app ChatGPT reached that milestone in around two months.
After Threads reached 70 million users, Zuckerburg said that the growth was “Way beyond our expectations.”
The sharp growth in Threads subscriber base can be attributed to two reasons. Firstly, the app is linked to Instagram which is the fourth most popular social media network with over 2 billion users globally.
The user base acted as a captive target market for Meta Platforms and helped it hit the 100 million milestone within days. To put that in perspective, Twitter has around 250 million active users.
Also, the strong growth in Threads’ user base can be attributed to the growing disenchantment with Twitter, at least among a section of the users.
Twitter has been marred by controversies and glitches
Ever since Musk acquired Twitter, the platform has faced multiple glitches and controversies.
Twitter’s traffic has fallen since Threads was launched and according to SimilarWeb, “In the first two full days that Threads was generally available, Thursday and Friday, web traffic to twitter.com was down 5% compared with the same days of the previous week. As a year-over-year comparison, it was down 11% compared with July 6 and 7, 2022.”
That said, after the initial bump, the engagement numbers on Threads have also come down. However, these are still early days for Threads and the platform has the advantage of being part of Meta Platforms – the world’s largest social media network.
As for Twitter, its almost unending woes might compound further with the launch of Threads. It has been less than eight months since Musk acquired Twitter and far from the turnaround that Musk was targeting, the platform continues to face newer issues.
Trusted & Regulated Stock & CFD Brokers
What we like
- 0% Fees on Stocks
- 5000+ Stocks, ETFs and other Markets
- Accepts Paypal Deposits
Min Deposit
$200
Charge per Trade
Zero Commission on real stocks
64 traders signed up today
Visit Now67% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.
Available Assets
- Total Number of Stocks & Shares5000+
- US Stocks
- German Stocks
- UK Stocks
- European
- ETF Stocks
- IPO
- Funds
- Bonds
- Options
- Futures
- CFDs
- Crypto
Charge per Trade
- FTSE 100 Zero Commission
- NASDAQ Zero Commission
- DAX Zero Commission
- Facebook Zero Commission
- Alphabet Zero Commission
- Tesla Zero Commission
- Apple Zero Commission
- Microsoft Zero Commission
Deposit Method
- Wire Transfer
- Credit Cards
- Bank Account
- Paypall
- Skrill
- Neteller
What we like
- Sign up today and get $5 free
- Fractals Available
- Paypal Available
Min Deposit
$0
Charge per Trade
$1 to $9 PCM
Visit Now
Investing in financial markets carries risk, you have the potential to lose your total investment.
Available Assets
- Total Number of Shares999
- US Stocks
- German Stocks
- UK Stocks
- European Stocks
- EFTs
- IPOs
- Funds
- Bonds
- Options
- Futures
- CFDs
- Crypto
Charge per Trade
- FTSE 100 $1 - $9 per month
- NASDAQ $1 - $9 per month
- DAX $1 - $9 per month
- Facebook $1 - $9 per month
- Alphabet $1 - $9 per month
- Telsa $1 - $9 per month
- Apple $1 - $9 per month
- Microsoft $1 - $9 per month
Deposit Method
- Wire Transfer
- Credit Cards
- Bank Account
Share
