Why Cash Flow Remains Negative at Twitter: Elon Musk Reveals 50% Drop in Advertising Revenue and Heavy Debt

Elon Musk: Twitter Faces Negative Cash Flow Due to Drop in Advertising Revenue

Tesla and SpaceX CEO Elon Musk Raises Concerns Over Twitter’s Cash Flow

Elon Musk, also known for his roles as CTO and Executive Chairman of Twitter, expressed that the company is currently facing negative cash flow. This is attributed to a significant drop of nearly 50% in advertising revenue, coupled with a heavy debt burden.

Musk stated, “Need to reach positive cash flow before we have the luxury of anything else,” in response to a tweet.

Musk took over Twitter in October of last year in a deal valued at around $44 billion, including about $13 billion in debt. He sold billions of dollars worth of his Tesla shares to partially finance the acquisition.

In January, many advertisers reduced or ceased their advertising spending on Twitter due to Musk’s layoffs at the company and changes to the platform, such as reinstating previously banned accounts and modifying content moderation policies.

During an interview with a BBC reporter in April, Musk reported that “almost all” advertisers had resumed purchasing ads on Twitter. He also claimed that the company was “roughly breakeven” and anticipated achieving positive cash flow within the next quarter.

Expectations Surrounding the Appointment of Yaccarino

The appointment of Yaccarino brought hope to media industry insiders, as they believe it will address immediate challenges facing Twitter’s advertising business.

Limited Scope of Twitter’s Revenue-Sharing Program

In response to followers questioning the limited scope of Twitter’s revenue-sharing program, Musk made his remarks. Recently, Twitter began sharing a portion of its ad revenue with selected content creators on the platform.

However, many widely followed accounts expressed disappointment in not qualifying for the program yet. It was revealed that the revenue-sharing program was only available to users with a paid Twitter Blue verified subscription, and the amounts paid were based on ads placed in replies to tweets.

Twitter Payments and Influencers

Several influencers, including Andrew Tate, known for espousing misogynistic views and currently facing charges of rape, human trafficking, and forming a criminal gang in Romania, claimed to have received payments from Twitter. Tate has filed lawsuits against his accusers.

Other right-wing influencers, as well as fans and promoters of Tesla stock and products, such as Omar Qazi (@WholeMarsBlog) and Sawyer Merritt, also mentioned receiving Twitter payments, with each netting over $5,000.

Mainstream influencers who disclosed their Twitter income included Brian and Ed Krassenstein, Mr. Beast, and the account @interneth0f (Internet Hall of Fame), which shares popular posts from social media.

Unfortunately, the total amount Twitter paid creators in this initial round of payments is unclear. AsumeTech’s request for comment received an automated reply with a crude symbol. Additionally, X Corp., the parent company of Twitter, currently faces multiple lawsuits from former employees and vendors regarding non-payment of bills and severance.

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