Elon Musk said on Saturday that there had been a 50% drop in Twitter’s advertising revenues. Furthermore, he draws attention to Twitter’s heavy debt load. Both of these factors are contributing to Twitter’s negative cash flow.
According to Musk, this cash flow fell short of his expectation, as he expects Twitter to be cashflow positive by June. As there were many suggestions of recapitalization on Twitter, Musk replied through a tweet –
“Need to reach positive cashflow before we have the luxury of anything else.”
On Sunday, Musk added that he did not see an increase in ad revenue in June, but it is highly possible in July, as he tweeted, “July is a bit more promising.” Musk tweeted on 15th July –
“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.”
These factors show that the aggressive cost-cutting measures that Musk took after acquiring Twitter in October are not enough to get Twitter’s cash flow positive. This also further suggests that the company’s ad revenue may not have quick;y recovered, as Musk talked about in April, that most of Twitter’s advertisers returned to the site.
Furthermore, as per the data forwarded by The Guardian –
“Twitter also faces annual interest payments of about $1.5bn as a result of the debt it took on in the $44bn deal that turned the company private.”
After Musk bought Twitter and fired thousands of employees, plus ensured the cutting of the cloud service bills, Musk claimed that these steps helped in reducing the non-debt expenditures by three times.
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