Deep Dives

Musk reveals significant drop in Twitter's ad revenue and heavy debt

July 16, 2023
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Twitter, under Elon Musk's leadership, is struggling financially due to a drop in advertising revenue and a high debt load, despite seeing potential for increased user engagement.

Twitter's Financial Situation: Twitter has not been generating profits.
  • It has a negative cash flow problem.
  • This is mainly due to a substantial decrease in ad revenue, approximately by 50%.
  • The company also bears a heavy debt burden.
  • Musk suggests that the priority is to reach positive cash flow.

  • Revival of Ad-Revenue and User Engagement: Twitter has seen some recovery and potential growth.
  • Its ad-revenue sharing program has started paying out again.
  • Musk indicated an expectation of "all-time high device user seconds usage" within the week.
  • Many advertisers who left have either returned or expressed an intention to do so.

  • Significant Losses in Advertising Spend: Twitter has experienced a massive drop in ad spend.
  • Research from Sensor Tower indicates a decrease in advertising spend by 89% to $7.6 million during a recent two-month period.

  • The Company's Debt and Cost-Cutting Measures: Twitter has substantial debts and ongoing cost-cutting initiatives.
  • Musk privatized Twitter at $44 billion, resulting in large annual interest payments of about $1.5 billion.
  • Despite aggressive cost-cutting measures implemented by Musk, Twitter's financial stability remains elusive.

  • The Task Ahead for the New CEO: The new CEO faces the challenge of rebuilding Twitter's financial stability.
  • Rebuilding the advertising base will be a major part of her task.
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