Elon Musk Admits Twitter Is Still In Negative Cash Flow Due To A 50% Ad Revenue Reduction

Twitter is still experiencing negative cash flow due to a decrease in ad revenue (photo: Doc. Pixabay).

JAKARTA - Twitter is still experiencing negative cash flow due to a nearly 50% decrease in advertising revenue and a huge debt burden. This was conveyed by Elon Musk on Saturday, July 15. This was not in line with his hopes in March that Twitter could reach positive cash flow last June.

"It is necessary to achieve positive cash flow before we can do other things," Musk said in a tweet in response to suggestions on recapitalization.

This is the latest sign that aggressive cost cutting measures since Musk acquired Twitter in October 2022 were not enough to get Twitter to reach positive cash flow, and indicated that Twitter's ad revenue may not have recovered as quickly as he predicted in an interview with the BBC in April that most advertisers had returned to the site.

After cutting employment for thousands of employees and cutting cloud service costs, Musk stated that the company managed to reduce debt-unrelated expenses to USD 1.5 billion (IDR 22.7 trillion) from an estimated USD 4.5 billion (IDR 68.3 trillion) in 2023.

Twitter also had to pay an annual interest of around $1.5 billion as a result of the debt it took in a 44 billion deal that made the company private.

It is not yet clear in what time Musk referred to a 50% decrease in advertising revenue. He has said that Twitter is on track to record revenues of US$3 billion (Rp45.5 trillion) in 2023, down from US$5.1 billion (Rp77.4 trillion) in 2021.

Twitter has been criticized for its lack of content moderation, followed by the exit of many advertisers who don't want their ads to appear next to inappropriate content.

Recruitment of Linda Yaccarino, former head of Comcast's NBCUniversal ad section as CEO, by Musk indicates that advertising sales are a priority for Twitter even though they are trying to increase revenue from subscriptions as well.

Yacarino started working on Twitter in early June and has informed investors that Twitter plans to focus on video partnerships, content creators, and trade, as well as in the middle of initial talks with political and entertainment figures, payment services, as well as news and media publishers.

On Thursday, July 13, Twitter announced that selected content creators would be eligible to gain some of the company's ad revenue as an attempt to attract more content creators to the site.