Home » Business » Twitter’s Heavy Debt Load and Falling Advertising Revenue: Challenges and Elon Musk’s Prediction

Twitter’s Heavy Debt Load and Falling Advertising Revenue: Challenges and Elon Musk’s Prediction

In a post on Saturday, Twitter CEO Shen acknowledged that Twitter has yet to reach a cash flow surplus and that a “heavy debt load” and advertising revenue falling to half of normal levels haven’t helped the billionaire.

Elon Musk predicted in March that Twitter had a chance of reaching cash flow surpluses in the second quarter of 2023, but he admitted in a recent post that the company has yet to reach that goal.

Responding to a question about debt restructuring, Elon Musk told followers, “With ad revenue down about 50%, combined with a heavy debt load, we are still cash flow negative.” He added that Twitter needs to “achieve Only when there is a surplus of cash flow, can there be room for other things to do.”

Twitter’s problems stem from a number of factors, including a “heavy debt load” incurred when Elon Musk bought and took Twitter private. Annual interest payments cost Twitter about $1.5 billion, according to Reuters.

In addition, a 50% drop in ad revenue has also been a problem for the company, and Twitter’s post-acquisition relationship with advertisers has been divided, a period that reportedly included Apple, which once distanced itself from Twitter but then returned.

Twitter has also undertaken stringent cost-cutting measures, including multiple mass layoffs and, in some cases, failing to pay bills and rent.

Elon Musk’s comments came as Twitter is under attack from Threads, a competing platform that has had fairly short-term success. Naturally, shortly after launch, Twitter threatened to sue Meta for copying its model.

source:appleinsider

Image Source:appleinsider

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2023-07-17 08:11:06
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