- Elon Musk voices concerns over Twitter's negative cash flow, blames a precipitous drop in ad revenue and a significant debt load.
- Twitter's recent revenue-sharing initiative sparks controversy due to its limited scope and selectivity, causing discontent among influencers.
- With Yaccarino at the helm and X Corp facing legal troubles, Twitter is under immense pressure to turn its financial woes around.
Elon Musk, the multifaceted titan at the helm of Tesla, SpaceX, and as of late, Twitter, divulged in the wee hours of a Saturday that Twitter's cash flow is still in the red. This precarious situation is attributed to a roughly halved advertising revenue and an imposing load of debt. "There's a pressing need to tip the scales towards positive cash flow, a prerequisite before we can entertain other luxuries," Musk voiced in a tweet.
Musk, who added the reins of Twitter to his repertoire in October last year through a deal totalling approximately $44 billion (which included a $13 billion debt), offloaded billions of dollars' worth of his Tesla shares to underwrite the venture. By January, Twitter faced a significant backlash from advertisers who curtailed or completely ceased their ad expenditures on the platform. The retreat was spurred by Musk's radical staffing cutbacks and his drastic shifts in the platform's policies, including reactivating previously banished accounts and overhauling content moderation.
Fast forward to April, and Musk reassured the BBC that nearly all advertisers had recommenced their Twitter ad spending. He also asserted that the social media platform was hovering around the break-even mark and was on the cusp of positive cash flow in the upcoming quarter.
A scant month after Linda Yaccarino, ex-head of global advertising for Comcast's NBCUniversal, took up the mantle of Twitter CEO, Musk's revelation about Twitter's cash flow predicament surfaced. Yaccarino's entry had rekindled hope among media pundits that Twitter's ad-related challenges would be addressed promptly. Recently, Twitter rolled out a revenue-sharing initiative for a select few content creators, Musk's comments were in response to queries about the program's limited range.
Many popular Twitter accounts expressed discontent about not qualifying for the revenue-sharing program yet. It was previously reported that the program was limited to Twitter Blue verified subscription users. However, details about the total payment to creators in this first round remain obscure. Meanwhile, X Corp., Twitter's parent company, faces a plethora of lawsuits from ex-employees and vendors over unpaid dues and severance.
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