American billionaire Elon Musk announced on Saturday that Twitter's cash flow remains negative due to a nearly 50% drop in ad revenues, coupled with a heavy debt burden. This outcome did not meet his expectations from March that the platform would achieve positive cash flow by June. Musk tweeted, "We need to reach positive cash flow before we can afford anything else."
This is the latest indication that the stringent cost-cutting measures since Musk's acquisition of Twitter in October have not been sufficient to turn cash flow positive. It also suggests that Twitter's ad revenues may not have recovered as quickly as Musk stated in an interview with the BBC, where he claimed that most advertisers had returned to the platform.
After laying off thousands of employees and reducing cloud service bills, Musk noted that the company has cut non-debt-related expenses to $1.5 billion from an anticipated $4.5 billion in 2023. Twitter also needs to make annual interest payments of around $1.5 billion.
It is unclear how long Musk referred to when mentioning the 50% drop in ad revenues. He stated that Twitter is on track to achieve revenues of $3 billion in 2023, down from $5.1 billion in 2021. Twitter has faced criticism for its lax content moderation, which has led to a significant withdrawal of advertisers fearing their ads would appear alongside inappropriate content.
