Over 500 Advertising Clients Have Halted Spending Since Musk’s Takeover In October
Twitter is reporting a 40% year-over-year drop in ad revenue and adjusted earnings for December. Over 70 of Twitter’s top 100 advertisers weren’t spending money on ads before the takeover.
The chaotic nature of Musk’s $44 billion acquisition created concerns where aggressive activist groups pressured advertisers to halt their ad campaigns on the platform, causing a massive drop in revenue.
Oreo Mondelez, United Airlines, and General Mills were among the big-name firms that expressed concerns about content moderation, resulting in a spending stoppage.
Musk expects Twitter to break even on cash flow in 2023. Musk made the first interest payment in January to banks who helped finance the purchase of the social media platform.
Musk’s Juggling Act. Musk says the 90-day period gave him time to save Twitter from bankruptcy even though SpaceX and Tesla required his time and leadership.
Twitter was losing millions of dollars every day, prompting him to call Twitter the world’s largest non-profit. Say what you want about me, but I acquired the world’s largest non-profit for $44B lol, the billionaire mused in a tweet.
The primary revenue source for Twitter is advertising. Ads by giants like Pfizer and Audi accounted for 90% of its more than $5 billion revenue.
Complicating the withdrawal of large-scale advertisers is the increase in hate speech. Advertisers were reportedly alarmed by a large volume of fake accounts. Twitter relaunched the blue tick plan for verified users fell short of its intended effect.
Musk sold shares in Tesla amounting to $20 billion to help finance the Twitter deal in late 2022.
With upcoming debt payments of as much as $ 13 billion, Musk considered selling more Tesla shares or placing Twitter in bankruptcy protection.
Twitter faced a negative cash flow of $3bn a year. The company should reach cash flow break-even. Cost-cutting efforts include the departure of more than 5,000 staff. The company was not in the fast lane to bankruptcy anymore. - Elon musk
Twitter currently faces annual interest payments estimated at over $1 billion. Recession fears and concerns by industry leaders over content moderation are preventing the return of large-scale advertisers to the social media platform.
Douglas Pilarski is an award-winning Writer & Journalist based on the west coast. He writes about luxury goods, exotic cars, horology, tech, food, lifestyle, millionaire travel, and the workplace. He is a regular contributor to Newsbreak.com and Medium.com.
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