This is to bust the myth of the smart billionaire. The heir Elon Musk, whose family explored emerald mines in South Africa, and who already declared in 2019 that he hates advertising, but bought a company that depends on it, sees Twitter’s revenue fall by almost 50% amid the rise of Threads, as he declared himself.
Musk laid off about half of the 7,500 employees in the Twitter when he took over in 2022 in an effort to cut costs. Meanwhile, rival app Threads now has 150 million users, according to estimates. Its built-in connection to Instagram automatically gives Meta’s platform access to a potential two billion users.
Twitter is struggling with a heavy debt load. Cash flow remains negative, Musk declared over the weekend, although the billionaire has not set a time frame for the 50% drop in ad revenue.
“We need to achieve positive cash flow before we can afford anything else,” the billionaire said in a tweet.
Lucy Coutts, director of investments at JM Finn, told the BBC’s Today program that she thought Musk would be able to change Twitter, “but it will take longer”.
“Unfortunately, he has $13 billion in debt to pay off by the end of July, so we could see more pressure on Tesla stock if he has to sell more of his stake in the company,” he said.
Musk is also the chief executive and majority shareholder of electric car maker Tesla, which will report its latest quarterly financial results on Wednesday (19).
After laying off thousands of employees and slashing bills for cloud services, Musk said Twitter was on track to record $3bn (£2.29bn) in revenue in 2023, down from $5.1bn in 2021. This is the latest sign that aggressive cost-cutting measures have not been enough to provoke a return from advertisers, who fled after changes to the platform’s content moderation rules.
However, Meghana Dhar, former head of partnerships at Snap and Meta, which owns the app Twitter’s rival said the company was struggling ahead of Musk’s purchase.
“Elon and Twitter are in a frankly difficult position right now. In fairness to Elon, though, we’ve seen this decline in Twitter revenue since before the social network was purchased. There was kind of a steady decline,” Meghana told the BBC’s Today programme.
Linda Yaccarino, former head of advertising at NBCUniversal, took over as Twitter’s chief executive in June, a move that suggests advertising sales are still a top priority for the company.
The executive said Twitter plans to focus on video partnerships, creators and commerce. There are indications that the social network is in early talks with political and entertainment figures, payment services and news and media publishers.
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Since Elon Musk bought Twitter for $44 billion, the platform has gone from bad to worse. For being in favor of unrestricted freedom of expression, the eccentric billionaire ended moderation on the network, giving voice to hate speech and removing advertisers who did not want to have their names linked to a social network that allows prejudiced opinions without the slightest shame.
In addition to this, Musk collects other pataquadas in charge of the company, such as limiting the visualization of tweets for non-subscribing users and automatic responses with poop emoji.
* With information from the BBC
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