Elon Musk, former CEO and owner of Twitter, revealed in a recent tweet that the social media platform is facing negative cash flow due to a significant decline in advertising revenue and a burdensome debt load.
These issues have been made worse by Musk’s activities, since the fallout from his unsuccessful attempt to withdraw from a $44 billion offer led to a lawsuit being filed by Twitter’s attorneys.
In order to fund the transaction, Musk sold some of his Tesla stock and, as previously reported by Interesting Engineering, took out a loan with a one billion dollar annual interest payment. Musk took a number of actions after assuming the position of CEO that adversely affected Twitter’s financial position. He lifted the restrictions on content moderation and unbanned accounts, which caused a massive exodus of advertisers from the network. As a result, compared to Instagram, which is owned by Meta, Twitter’s ad sales have continued to be far lower and have not yet fully recovered.
Musk’s recent claim of negative cash flow contradicts his previous statement in an interview with the BBC, where he suggested that all advertisers had returned to the platform, and it was expected to be “roughly breakeven” with positive cash flow within three months. Now, Musk is focused on achieving positive cash flow as a top priority.
Musk launched a subscription-based business and fired thousands of employees in order to improve the company’s financial situation. To oversee Twitter’s efforts, Musk hired Linda Yaccarino, a seasoned marketing expert, but these efforts haven’t produced any notable gains.
Musk continues to actively participate in key Twitter announcements even though he has resigned as CEO, such as limiting the quantity of tweets that users may access. Yaccarino is exploring video and business partnerships while also working behind the scenes to improve users’ Twitter experiences. Twitter has also started to share revenue with a small group of content producers, but this programme is only available to Twitter Blue subscribers.
Challenges for Yaccarino’s efforts to turn the company’s fortunes around have intensified with the launch of Meta’s Threads, a rival app seeking to emulate the positive aspects of Twitter. Threads has already attracted more than 150 million customers in a week, surpassing platforms like Mastodon and Bluesky, mainly due to the ability to use existing Instagram accounts for sign-ups. As Twitter faces these uphill battles, its future direction and financial recovery remain uncertain.