Things aren’t exactly looking bright at Elon Musk’s Twitter.
Over the weekend, Musk revealed on the social media platform that the company is struggling to break even after his $44 billion acquisition last November.
A Twitter user joked with the billionaire that he should create a “consortium” of people that share his vision for what the future of Twitter should become, to which Musk responded that the company doesn’t have the “luxury” of testing any new ideas out right now because it has “negative cash flow.”
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
Musk’s antics on the platform and questionable business decisions upon purchasing it — from instating mass layoffs, ousting top executives on day one, removing the company’s legacy blue checkmark program, and allowing previously banned accounts back on the app — have caused many major advertisers, such as Wells Fargo, to drop its advertising.
By the end of January, roughly 60% of Twitter’s top advertisers had dropped out.
A report from the Wall Street Journal earlier this year claimed that Twitter was offering companies free ads as an incentive to get them to continue spending money on the company, though Musk nor Twitter publicly confirmed the tactic.
However, Musk told BBC in April that most of Twitter’s advertisers had returned and that the company was already in a $3 billion cash deficit when he purchased it.
Twitter was once a publicly traded company but became private under Musk when he finalized his purchase last fall.
He stepped down as CEO this past May, appointing former NBCUniversal executive Linda Yaccarino to his position.