Twitter owner Elon Musk said the company still has a negative cash flow because of its heavy debt load and a roughly 50% drop in advertising revenue.
The social media site will “need to reach positive cash flow before we have the luxury of anything else,” Musk said in a tweet.
Several top advertisers paused spending on the platform after Musk acquired the company last year over concerns about changes the billionaire could make. Earlier this year, Musk said that many of the advertisers who fled had returned, and that becoming cash-flow positive was imminent.
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
“Almost all of them have either come back or said they’re coming back,” Musk said in a Twitter Spaces in April.
Advertiser spending dropped 89% to $7.6 million over a two-month period early this year, according to estimates for market research firm Sensor Tower. The top 10 advertisers had spent $71 million on ads from September to October of 2022, ahead of Musk’s acquisition.
Musk purchased the social media company for $44 billion in late October 2022. He has since made a slew of changes to the product and company structure, many of which he attributes to decreasing the company’s cash burn and debt burden.
The firm laid off thousands of employees in the wake of the deal. Among other changes, Musk introduced Twitter Blue, which lets users to verify their identity for $8 per month, and debuted ways for users to monetize their content.
Meta Platforms Inc.’s Mark Zuckerberg released his own Twitter competitor this month, Threads, which rapidly reached 100 million users in the days after its launch. Some lawmakers have transitioned over to the alternative platform, but are still wary about committing to it.