Elon Musk confirmed that Twitter continues to lose money as a result of its advertising revenues dropping by nearly half and the effects of a heavy debt burden.
The billionaire billionaire, who acquired the social media platform in a $44 billion takeover last year, has given seemingly conflicting updates about his financial situation over the following months. After warning in November that the group was fighting for survival, Musk claimed in April that it was near collapse even after he drastically cut costs and laid off thousands of employees.
Responding to a Twitter user who suggested over the weekend that he should form a consortium to buy the company’s debt, Musk, 52, wrote: “We’re still negative cash flow, due to a 50% drop in ad revenue plus a heavy debt load. We need access.” to positive cash flow before we have the luxury of anything else.”
In another tweet on Sunday, he said the company hadn’t seen the increase in ad revenue he had expected in June, though he added that the month looked “a bit promising.”
Concerns about lax content moderation, along with Musk’s plans for Twitter, led to an exodus of advertisers who didn’t want their ads to appear next to inappropriate posts. In the second quarter of 2022 — the last for which Twitter reported results as a public company — it generated $1.08 billion in ad revenue, which is 91 percent of its total sales.
ARK Investment Management, the investment vehicle of Musk’s main backer Cathy Wood, has reduced its stake in Twitter by 47 percent since the acquisition. Wood told the Wall Street Journal that she remained optimistic about Twitter’s long-term prospects. “The downgrade does not represent our core view and belief in the long-term return on investment that we believe it will bring to our shareholders,” she said.
