The level of Twitter’s revenue from placing advertising materials on this virtual platform has almost halved after Elon Musk became the owner of the social network in October last year.
The value of the deal for the purchase of Twitter by the current owner was $44 billion. The company counted on an increase in financial indicators as a result of the activities of the social network related to advertising in June, but this did not happen. Since the beginning of July, promising trends in this direction have been recorded, which, however, have not changed the situation.
Elon Musk began his activity as head of Twitter with the implementation of a plan to reduce costs. As part of this strategy, he dismissed 7,500 employees of the social network.
Currently, Twitter exists under the influence of a very heavy financial encumbrance, which is the debt burden. Last weekend, Elon Musk said that the cash flow of the social network is in the zone of negative values. At the same time, the billionaire did not say for what period there was a halving of advertising revenue.
On his Twitter page, Elon Musk published a message in which he stated that the virtual platform needs to achieve a positive cash flow before it becomes possible to afford the luxury of anything else. The billionaire did not specify what he meant by the concept of luxury in the context of statements about the prospects of a social network, provided a favorable financial situation.
Having laid off some of Twitter’s employees and reduced bills for cloud services, Elon Musk said that in 2023 the company’s revenue will amount to $ 3 billion. By the end of 2021, this figure was equal to 5.1 billion dollars.
Lucy Coutts, investment director at JM Finn, expressed confidence that Elon Musk is capable of a profound transformation of Twitter, but, according to her, this process takes time. She noted that by the end of July, the owner of the social network will have to pay $ 13 billion in debt. According to Lucy Coutts, against the background of the approaching deadline for fulfilling a financial obligation, Tesla shares may be under pressure shortly. According to her, this scenario will be realized if Elon Musk has to sell his share in the company for the production of electric cars to pay off the debt.
The billionaire is currently also the chief executive officer and majority shareholder of Tesla. This week it will be announced about the financial results of the electric car manufacturer according to the results of the second quarter of 2023.
The current state of affairs indicates that Elon Musk’s strategy of aggressive cost reduction has not justified itself as a way of returning advertisers who refused to interact with the virtual platform due to changes in the rules of content moderation. At the same time, the billionaire in April assumed that most advertisers had returned.
Meghana Dhar, former head of partnerships at Snap and Meta, which owns the new Twitter rival Threads, says that the social network was already experiencing difficulties before the change of ownership. She described the current state of affairs as frankly difficult, noting that a kind of steady decline is currently being recorded.
Linda Yaccarino, who previously headed the advertising department at NBCUniversal, was appointed executive director of Twitter in June. According to experts, this personnel decision is evidence that advertising sales are of priority importance for the social network. She announced the intention of the virtual platform to focus on interaction with content creators and representatives of the commercial sector. Currently, there are rumors that Twitter is negotiating with politicians, payment services, the media, and representatives of the entertainment industry. The exact purpose of this process is not known, but it can be assumed with a high degree of probability that it concerns the attempts to improve the commercial aspects of the existence of a social network.
As we have reported earlier, Twitter to Make TweetDeck Available Only to Verified Users.
