Since Elon Musk paid $44 billion (£33.6 billion) to acquire Twitter in October of last year, Twitter has seen a nearly 50% decline in advertising revenue, according to the company’s owner.
Although he added that July was “a bit more promising,” he stated that the business had not experienced the increase in sales that had been anticipated in June.
When Mr. Musk took over in 2022, he fired about half of Twitter’s 7,500 employees in an effort to reduce costs. Rival app Threads now has 150 million users, according to some estimates. Its in-built connection to Instagram automatically gives the Meta-designed platform access to a potential two billion users.
Meanwhile, Twitter is struggling under a heavy debt load. Cash flow remains negative, Mr Musk said at the weekend, although the billionaire did not put a time frame on the 50% drop in ad revenue.
In a tweet he said: “Need to reach positive cash flow before we have the luxury of anything else.”
Lucy Coutts, investment director at JM Finn, told the BBC’s Today programme she thought Mr Musk would be able to turn Twitter around “but it is just going to take longer”. “But unfortunately he has got $13bn of debt to pay by the end of July so we may see more pressure on the shares in Tesla if he has to sell more of his stake in that company.”
Mr Musk is also the chief executive and majority shareholder of electric car-maker Tesla, which will report its latest quarterly financial results on Wednesday.
After laying off thousands of employees and cutting cloud service bills, Mr Musk said Twitter was on track to post $3bn (£2.29bn) in revenue in 2023, down from $5.1bn in 2021.
However, Meghana Dhar, the former head of partnerships at Snap and Meta, which owns the new Twitter rival Threads, said the company had been struggling prior to Mr Musk’s buyout.
“Elon and Twitter are in a candidly tough position right now,” she told the BBC’s Today programme. “To be fair to Elon though, we’ve seen that decline in Twitter advertising revenue and growth in revenue since pre-Elon – there’s been kind of a steady decline.”