Elon Musk stated on Saturday that Twitter’s cash flow is still negative due to a roughly 50% decline in ad income and a high debt burden, falling short of his prediction from March that Twitter might become cash flow positive by June.
Elon Musk responded to demands for recapitalization in a tweet by saying, “We need to reach positive cash flow before we have the luxury of anything else.”
In a subsequent Sunday tweet, Elon Musk noted that while June’s boost in ad income had not materialized, “July is a bit more promising.” Twitter Spaces is “all-cost” and hasn’t yet generated any income, according to Musk.
This is the most recent indication that the drastic cost-cutting measures implemented since Elon Musk acquired Twitter in October alone are insufficient to turn the company’s cash flow positive. It also suggests that Twitter’s ad revenue may not have recovered as quickly as Musk indicated in an interview with the BBC in April, when he claimed that the majority of advertisers had come back to the site.
Elon Musk said that the company’s non-debt spending was down to $1.5 billion from a predicted $4.5 billion in 2023 after thousands of employees were let go and cloud service costs were slashed. In addition, Twitter must pay interest on the $1.5 billion in debt it acquired in the $44 billion deal that took the business private every year.
With the 50% decline in ad income, Elon Musk may have been alluding to a certain time period. As opposed to $5.1 billion in 2021, he claimed Twitter was on track to generate $3 billion in revenue in 2023.
Due to complaints about Twitter’s inadequate content management, several sponsors left because they did not want their advertising to show next to improper content.
Linda Yaccarino, a former head of advertising at Comcast’s NBCUniversal, was appointed CEO by Elon Musk, indicating that Twitter prioritizes ad sales even as it strives to boost subscription income.
Yaccarino began working for Twitter at the beginning of June and has since informed investors that the company aims to concentrate on video, creative, and commerce relationships and that it is now in preliminary discussions with politicians, celebrities, payment providers, and news and media publishers.
In an effort to entice more content producers to the site, Twitter said on Thursday that some of them would be qualified to get a portion of the ad money the firm generates.
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