According to a recent disclosure from Twitter’s owner, the social media platform has witnessed a substantial decrease in advertising revenue, with earnings dropping by nearly 50% since its acquisition by Elon Musk for $44 billion (£33.6 billion) in October of the previous year.
Despite initial expectations of increased sales in June, the company fell short of the anticipated growth. However, there are more positive prospects on the horizon for July, as indicated by Musk.
Following Musk’s takeover of Twitter in 2022, cost-cutting measures were implemented, resulting in the dismissal of approximately half of the company’s 7,500 employees. Nevertheless, Twitter has struggled to maintain a positive cash flow and is burdened with significant debt.
In the meantime, rival social media app Threads has emerged as a formidable competitor, with an estimated user base of 150 million. Its integration with Instagram, a platform developed by Meta, provides Threads access to a potential two billion users.
While not specifying a specific time frame, Musk acknowledged the decline in Twitter’s ad revenue, emphasizing the need for the company to achieve positive cash flow before exploring other options.
Investment director Lucy Coutts from JM Finn expressed confidence in Musk’s ability to turn Twitter around but cautioned that it may take longer than expected. She also noted Musk’s obligation to pay off $13 billion in debt by the end of July, which could potentially impact Tesla’s shares if he is required to sell more of his stake in the electric car-maker.
As CEO and majority shareholder of Tesla, Musk is preparing to announce the company’s latest quarterly financial results on Wednesday.
Despite extensive cost-cutting efforts, Twitter has struggled to win back advertisers who left after changes were made to its content moderation policies. Musk previously stated in an interview with the BBC that most advertisers had returned, but the recent decline in revenue suggests otherwise.
Meghana Dhar, former head of partnerships at Snap and Meta, observed that Twitter faced challenges even before Musk’s acquisition. She described the current situation as difficult for both Musk and Twitter, noting the ongoing revenue decline prior to Musk’s involvement.
To prioritize advertising sales, Twitter appointed Linda Yaccarino, former head of advertising at NBCUniversal, as its CEO in June. Yaccarino has outlined plans to focus on video, creator, and commerce partnerships. The company is reportedly in preliminary discussions with political and entertainment figures, payment service providers, and news and media publishers.
As Twitter navigates these challenges under Musk’s ownership, industry observers will closely watch the company’s future prospects and its ability to regain a strong position in the advertising market.
New CEO, Linda Yaccarino, aims to lead the company’s recovery by prioritizing video content, collaborations with creators, and partnerships in commerce. Early discussions are underway with various stakeholders, including political and entertainment figures, payment service providers, and news and media publishers. These initiatives demonstrate Twitter’s commitment to diversifying revenue streams and revitalizing its appeal to advertisers.
However, industry experts acknowledge the uphill battle that lies ahead for Musk and Twitter. Meghana Dhar, with experience at Snap and Meta, points out the steady decline in Twitter’s revenue even before Musk’s involvement. This decline underscores the need for a comprehensive strategy to address the underlying issues that have plagued the platform.
While facing challenges, some analysts maintain optimism regarding Twitter’s potential under Musk’s leadership. Lucy Coutts, investment director at JM Finn, believes that Musk can successfully steer Twitter in the right direction, although it may require more time than initially expected. The company’s proactive cost-cutting measures and renewed focus on advertising sales demonstrate a commitment to restoring its financial well-being.
As Twitter strives to regain the trust of advertisers and overcome its financial hurdles, Musk’s attention will also be divided. With Tesla’s upcoming quarterly financial results, his focus will be shared between both companies. The outcomes of these endeavors will undoubtedly impact the future trajectory of both Twitter and Tesla.
The decline in advertising revenue serves as a reminder that acquisitions by high-profile individuals do not guarantee instant success. The Social Media Platform struggles highlight the challenges of revitalizing a social media platform in a competitive landscape. Only time will reveal whether the ongoing efforts led by Musk and Yaccarino will be sufficient to rejuvenate the companies revenue and reclaim its position in the advertising market.
As the company continues to navigate these critical junctures, industry observers will closely monitor Twitter’s progress and evaluate its ability to adapt and thrive in the evolving digital landscape.