Elon Musk says Twitter’s cash flow remains negative due to ‘heavy debt’
CEO of SpaceX, Twitter and electric car maker Tesla Elon Musk looks on during his speech during his visit to the Vivatech technology startup and innovation fair at the Porte de Versailles exhibition center in Paris on June 16, 2023. (Photo by Alain JOCARD / AFP ) (Photo by ALAIN JOCARD/ AFP via Getty Images)
Alain Jokar | Afp | Getty Images
Tesla and SpaceX CEO Elon Musk, who is also Twitter’s CTO and executive chairman, said early Saturday morning that the social media company’s cash flow remains negative due to a nearly 50% drop in advertising revenue, combined with ” heavy debts”.
“Must get to positive cash flow before we have the luxury of anything else,” Musk wrote in response to the tweet.
Musk bought Twitter last October in a deal valued at about $44 billion, including about $13 billion in debt. In part to finance the deal, he sold billions of dollars worth of Tesla stock.
By January, hundreds of advertisers had cut or stopped their ad spending on Twitter in response to Musk drastically cutting the company’s staff and making changes to the platform, notably restoring previously banned accounts and changing its approach to content moderation.
In April, Musk told a BBC reporter that “almost all” advertisers had resumed buying ads on Twitter. At the time, he also claimed the company was “roughly break-even” and expected to be cash-flow positive next quarter.
His statement today about Twitter’s cash flow woes comes just over a month after Linda Yacarino, who previously ran global advertising for Comcast Company NBCUniversal, has taken on the role of CEO of Twitter. NBCUniversal is the parent company of CNBC.
Yakarin’s appointment has raised hopes among media industry insiders that Twitter will immediately address the problems of the ad business.
In recent days, Twitter has begun giving away a share of its advertising revenue to individual content creators on its platform. Musk’s comments came in response to followers who wanted to know why this income-sharing program was so limited.
A number of Twitter accounts with large followings wrote that they were disappointed that they did not yet meet the requirements to earn income from the program. As previously reported by The Verge, the revenue-sharing program was only available to users who paid for a verified Twitter Blue subscription, and payouts were “driven by ads placed in replies to tweets.”
Andrew Tate, a misogynistic online influencer facing trial on charges of rape, human trafficking and forming a criminal ring to sexually exploit women in Romania, wrote that Twitter paid him more than $20,000. Tate sued the accusers who made the allegations.
Several right-wing influencers also tweeted about receiving payments, as did supporters and promoters of Tesla stock and products, including Omar Kazi (who goes by the Twitter handle “@WholeMarsBlog”) and Sawyer Merritt, who each tweeted about the payment more for 5000 dollars.
Mainstream and other influencers who shared details of their earnings on Twitter included Brian and Ed Krasenstein, Mr. Monster, and the @interneth0f account (which stands for Internet Hall of Fame). The Internet Hall of Fame posts screenshots of other people’s popular social media posts and shares them.
It’s unclear how much Twitter paid creators in this first round of payouts. Twitter sent an automated response with a crude character in response to CNBC’s request for comment on Saturday. Twitter’s parent company, X Corp., is facing multiple lawsuits from former employees and vendors over unpaid bills and severance payments.
