Twitter continues to lose money as a result of its advertising revenue falling by almost half and the effects of a heavy debt load, Elon Musk has confirmed.
The billionaire tycoon, who acquired the social media platform in a $44 billion takeover last year, provided apparently conflicting updates on its financial health over the following months. After warning in November that the group was fighting for survival, Musk claimed in April that it was almost breaking even after he had drastically cut costs and laid off thousands of staff.
Responding to a Twitter user who suggested at 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 ~50% drop in advertising revenue plus heavy debt load. Need to reach positive cash flow before we have the luxury of anything else.”
He said in another tweet on Sunday that the company had not experienced the increase in advertising revenue he had expected in June, although he added that this month seemed “a bit more promising”.
Concerns over lax content moderation, along with Musk’s plans for Twitter, led to an exodus of advertisers that did not want their ads appearing next to inappropriate posts. In the second quarter of 2022 — the last for which Twitter filed results as a public company — it generated advertising revenue of $1.08 billion, amounting to 91 per cent of its total sales.
ARK Investment Management, the investment vehicle of Cathie Wood, a leading supporter of Musk, has written down its stake in Twitter by 47 per cent since the takeover. Wood told The Wall Street Journal that she remained bullish on Twitter’s long-term prospects, however. “The writedown is not representative of our fundamental outlook and belief in the long-term return on investment we believe that it will have for our shareholders,” she said.