Elon Musk has disclosed that Twitter is facing a significant financial crisis due to a sharp decline in advertising revenue and substantial debt. The social media giant has reportedly experienced an alarming 89% drop in advertising expenditure, plummeting to $7.6 million over a two-month period earlier this year, according to estimates provided by research firm Sensor Tower.
Musk’s disclosure came amidst reports of Twitter’s ongoing struggle with negative cash flow. The company’s financial woes are further exacerbated by annual interest payments of approximately $1.5 billion, a consequence of the debt incurred when Musk privatized the company for $44 billion.
Despite these challenges, Musk remains optimistic about the future of the platform. He stated that nearly all advertisers who had previously abandoned the platform following his takeover in October have either returned or expressed their intention to do so. Furthermore, he predicted that Twitter could witness an all-time high in device user seconds usage in the upcoming week.
However, these developments suggest that Musk’s aggressive cost-cutting strategies over the past year have not been successful in stabilizing the company’s financial situation. This puts the newly-appointed CEO, Linda Yaccarino, in a challenging position as she embarks on her mission to restore Twitter’s advertising base.
The news comes in the same week when Twitter initiated payments to some creators through its ad-revenue sharing program, including a few far-right influencers. Despite the financial difficulties, Musk emphasized the need for the company to achieve positive cash flow before considering any other luxuries.
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