Twitter loses half its ad revenue, still weighed down by debt

AppleInsider · July 15, 2023 10:35PM

Twitter hasn't become cash flow positive yet, Elon Musk has confirmed, with a "heavy debt load" and advertising revenue dropping to half its usual amount not helping matters for the billionaire.

Elon Musk

In March, Musk offered a prediction that Twitter had a chance of being cash flow positive by the second quarter of 2023. In a Saturday tweet, Musk admits the micro-blogging site hasn't met the mark.

In response to a question about refactoring debt, Musk told followers "We're still negative cash flow, due to ~50% drop in advertising revenue plus heavy debt load." Twitter needs to "reach positive cash flow before we have the luxury of anything else," he added.

Twitter's problems stem from a number of issues compounding the problem. For a start, the "heavy debt load" is caused by interest payments on debt Twitter took on when Musk acquired it and took it private.

According to Reuters, the annual interest payments cost Twitter around $1.5 billion.

The 50% drop in ad revenue is also an issue for the company, which has stumbled in its relationship with advertisers post-acquisition. This period allegedly included Apple as an advertiser who apparently veered away from Twitter, but later made a return.

Twitter has also undertaken a severe cost-cutting initiative, including multiple mass layoffs of employees, and in some cases, failing to pay bills and rent.

Musk's comments surface as Twitter is under attack from Threads, a rival platform that has seen considerable short-term success. Naturally, shortly after launch, Twitter threatened to sue Meta for copying it.

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jpellino · July 15, 2023 11:01PM

So Twitter was the preeminent microblogging platform, doing well enough to have shareholders getting earnings.
Musk buys it and starts pulling every lever he can find, many of which were clearly marked DO NOT TOUCH THIS LEVER.
Now the company is bleeding value, invisible to the public, and got its lunch eaten by Meta in less than a week of competition.
Oh, and a new half-billion liability based on Lever #2.

Remind me how this reflects on the legendary genius of Musk?

eightzero · July 15, 2023 11:15PM

....Pity......

radarthekat · July 15, 2023 11:51PM

I believe Musk is the only person on Earth smart enough to turn around this Twitter fiasco, and I know exactly how he can do it.

First, invent a Time Machine…

mikethemartian · July 16, 2023 12:00AM

The previous owners of Twitter must be laughing their asses off.

jfabula1 · July 16, 2023 12:17AM

mikethemartian said:

The previous owners of Twitter must be laughing their asses off.

That’s what this legacy car makers are doing when Mask started Tesla, who’s laughing now??

mikethemartian · July 16, 2023 12:48AM

jfabula1 said:

mikethemartian said:

The previous owners of Twitter must be laughing their asses off.

That’s what this legacy car makers are doing when Mask started Tesla, who’s laughing now??

Tesla and SpaceX probably have really great teams that get the work done in spite of Musk interfering and not because of him. With Twitter you get to see his on hands management skills and it is a shit show.

sdw2001 · July 16, 2023 12:52AM

jpellino said:

So Twitter was the preeminent microblogging platform, doing well enough to have shareholders getting earnings.
Musk buys it and starts pulling every lever he can find, many of which were clearly marked DO NOT TOUCH THIS LEVER.
Now the company is bleeding value, invisible to the public, and got its lunch eaten by Meta in less than a week of competition.
Oh, and a new half-billion liability based on Lever #2.
Remind me how this reflects on the legendary genius of Musk?

Twitter was an absolute disaster and a fraud. That’s why he almost canceled the deal. It was a bloated company that was all smoke and mirrors. It’s going to take a while for even him to turn it around.

Xed · July 16, 2023 1:04AM

sdw2001 said:

jpellino said:

So Twitter was the preeminent microblogging platform, doing well enough to have shareholders getting earnings.
Musk buys it and starts pulling every lever he can find, many of which were clearly marked DO NOT TOUCH THIS LEVER.
Now the company is bleeding value, invisible to the public, and got its lunch eaten by Meta in less than a week of competition.
Oh, and a new half-billion liability based on Lever #2.
Remind me how this reflects on the legendary genius of Musk?

Twitter was an absolute disaster and a fraud. That’s why he almost canceled the deal. It was a bloated company that was all smoke and mirrors. It’s going to take a while for even him to turn it around.

While reading your post I was going to ask why you think Twitter a fraudulent company, but by the end I was very curious as to why you think that Musk can "turn it around", and by the end of my comment it occurs to me that Musk has already "turned it around" from being a successful platform people depended on and loved to something that absolutely sucks big monkey balls because he's nothing but a snake oil salesman.

Stabitha_Christie · July 16, 2023 1:27AM

jfabula1 said:

mikethemartian said:

The previous owners of Twitter must be laughing their asses off.

That’s what this legacy car makers are doing when Mask started Tesla, who’s laughing now??

Elon Musk didn't start Tesla. It was started by Martin Eberhard and Marc Tarpenning. Musk wasn't involved until a year after the company was started when he became an investor. Musk has tried to rewrite history and claim he was a founder. Musk and the truth have a very strained relationship.

Stabitha_Christie · July 16, 2023 1:33AM

sdw2001 said:

jpellino said:

So Twitter was the preeminent microblogging platform, doing well enough to have shareholders getting earnings.
Musk buys it and starts pulling every lever he can find, many of which were clearly marked DO NOT TOUCH THIS LEVER.
Now the company is bleeding value, invisible to the public, and got its lunch eaten by Meta in less than a week of competition.
Oh, and a new half-billion liability based on Lever #2.
Remind me how this reflects on the legendary genius of Musk?

Twitter was an absolute disaster and a fraud. That’s why he almost canceled the deal. It was a bloated company that was all smoke and mirrors. It’s going to take a while for even him to turn it around.

Twitter was able to make a profit before Musk took ownership. So it may have been a disaster but it was certainly less of one that it currently is. Also, he didn't;t almost cancel the deal, that was smoke and mirrors as you put it. He was legally obligated to follow through the deal which is why he did.

You really should do some fact checking rather than just blindly repeating whatever he says.

Stabitha_Christie · July 16, 2023 1:44AM

In an April interview with the BBC he claimed that most advertisers had returned, that company was running at "roughly break even" and that it would have a positive cash flow in that quarter ... So was he lying then or has he really bungled it that badly in the last two and a half months?

9secondkox2 · July 16, 2023 3:42AM

Stabitha_Christie said:

sdw2001 said:

jpellino said:

So Twitter was the preeminent microblogging platform, doing well enough to have shareholders getting earnings.
Musk buys it and starts pulling every lever he can find, many of which were clearly marked DO NOT TOUCH THIS LEVER.
Now the company is bleeding value, invisible to the public, and got its lunch eaten by Meta in less than a week of competition.
Oh, and a new half-billion liability based on Lever #2.
Remind me how this reflects on the legendary genius of Musk?

Twitter was an absolute disaster and a fraud. That’s why he almost canceled the deal. It was a bloated company that was all smoke and mirrors. It’s going to take a while for even him to turn it around.

Twitter was able to make a profit before Musk took ownership. So it may have been a disaster but it was certainly less of one that it currently is. Also, he didn't;t almost cancel the deal, that was smoke and mirrors as you put it. He was legally obligated to follow through the deal which is why he did.

You really should do some fact checking rather than just blindly repeating whatever he says.

Twitter was anything but profitable in the true business sense. Being publicly traded, it got “free money” from investors. And those investors were investing based on false pretenses with the old incompetent Twitter leadership lying about its stats.

Musk bought it and turned it privately owned. That in itself is cutting off quite a bit of money. The you have some political weirdness with advertisers that simply don’t like musks views. It was bound to happen as Twitter was a liberal echo chamber and was bought by someone with more conservative views. So of course there would be storms to deal with. It’s early days yet. Musk is s very smart and successful leader. It says something that his multiple businesses are so pioneering and risky, yet successful.

It was an impossible task to tackle Twitter. But he did it. And now he’s fixing the broken foundations he bought. It was s fixer upper with serious issues. And it’s taking time to get right.

Xed · July 16, 2023 3:59AM

9secondkox2 said:

Stabitha_Christie said:

sdw2001 said:

jpellino said:

So Twitter was the preeminent microblogging platform, doing well enough to have shareholders getting earnings.
Musk buys it and starts pulling every lever he can find, many of which were clearly marked DO NOT TOUCH THIS LEVER.
Now the company is bleeding value, invisible to the public, and got its lunch eaten by Meta in less than a week of competition.
Oh, and a new half-billion liability based on Lever #2.
Remind me how this reflects on the legendary genius of Musk?

Twitter was an absolute disaster and a fraud. That’s why he almost canceled the deal. It was a bloated company that was all smoke and mirrors. It’s going to take a while for even him to turn it around.

Twitter was able to make a profit before Musk took ownership. So it may have been a disaster but it was certainly less of one that it currently is. Also, he didn't;t almost cancel the deal, that was smoke and mirrors as you put it. He was legally obligated to follow through the deal which is why he did.

You really should do some fact checking rather than just blindly repeating whatever he says.

It was bound to happen as Twitter was a liberal echo chamber and was bought by someone with more conservative views.

Put down the crack pipe.

jcc · July 16, 2023 4:18AM

I know what to do! First, look around, see if you can build a rudimentary lathe….

fred1 · July 16, 2023 5:24AM

It’s clear that he doesn’t understand (at least) one basic principle of business: you can’t make major changes to a business and expect your customers always to accept them all. Sure, they’ll agree with some changes, but that doesn’t mean you can do whatever you want.

mygig · July 16, 2023 6:58AM

So according to the comments, it was a sinking ship destined to doom in a couple weeks, that it won’t have any staff to run it, to now, that it will sink eventually? So if it doesn’t, then it will be the success of the new CEO?
Give me a break. He does and says stupid shit from time to time - true, but he never loses. The platform is a much more fun place to be right now and I bet you my iPad that it won’t fail 😉

ajohn · July 16, 2023 7:16AM

Can someone explain to me how Elon Musk buys Twitter but Twitter somehow inherits the debt? I’m very confused.

Can I also go out and buy a business but not have to be the one paying for it?

spheric · July 16, 2023 9:15AM

mikethemartian said:

jfabula1 said:

mikethemartian said:

The previous owners of Twitter must be laughing their asses off.

That’s what this legacy car makers are doing when Mask started Tesla, who’s laughing now??

Tesla and SpaceX probably have really great teams that get the work done in spite of Musk interfering and not because of him. With Twitter you get to see his on hands management skills and it is a shit show.

There was an anonymously sourced interview with a SpaceX employee that pretty much said exactly that. They had people “working late” in the offices even when there was literally nothing to do — actually gaming, with their monitors turned away from the cubicle doors and windows — just so that Musk could satisfy his fantasy of everybody going “above and beyond”. He was routinely confronted with irrelevant decisions, so that he felt in charge, while not given the chance to hinder actual development.

Twitter shows well what happens when people with money think they know better, rather than knowing to pay people who actually DO know better. Instead, he fired everyone competent who didn’t leave on their own.

Stabitha_Christie · July 16, 2023 10:45AM

9secondkox2 said:

Stabitha_Christie said:

sdw2001 said:

jpellino said:

So Twitter was the preeminent microblogging platform, doing well enough to have shareholders getting earnings.
Musk buys it and starts pulling every lever he can find, many of which were clearly marked DO NOT TOUCH THIS LEVER.
Now the company is bleeding value, invisible to the public, and got its lunch eaten by Meta in less than a week of competition.
Oh, and a new half-billion liability based on Lever #2.
Remind me how this reflects on the legendary genius of Musk?

Twitter was an absolute disaster and a fraud. That’s why he almost canceled the deal. It was a bloated company that was all smoke and mirrors. It’s going to take a while for even him to turn it around.

Twitter was able to make a profit before Musk took ownership. So it may have been a disaster but it was certainly less of one that it currently is. Also, he didn't;t almost cancel the deal, that was smoke and mirrors as you put it. He was legally obligated to follow through the deal which is why he did.

You really should do some fact checking rather than just blindly repeating whatever he says.

Twitter was anything but profitable in the true business sense. Being publicly traded, it got “free money” from investors. And those investors were investing based on false pretenses with the old incompetent Twitter leadership lying about its stats.

Musk bought it and turned it privately owned. That in itself is cutting off quite a bit of money. The you have some political weirdness with advertisers that simply don’t like musks views. It was bound to happen as Twitter was a liberal echo chamber and was bought by someone with more conservative views. So of course there would be storms to deal with. It’s early days yet. Musk is s very smart and successful leader. It says something that his multiple businesses are so pioneering and risky, yet successful.

It was an impossible task to tackle Twitter. But he did it. And now he’s fixing the broken foundations he bought. It was s fixer upper with serious issues. And it’s taking time to get right.

As you said Twitter was a publicly traded company and as such they were legally obligated to publish their financials quarterly. Those publications are publicly available. Because of that we know your claim has no basis in reality.

Twitter whet public in 2013 and didn't do any post IPO funding from investors until 2021. From 2021 to being purchased in October of 2022 they did four and half to those were after Musk agreed to buy the company. So please, back up your statement. Using the publicly available data show how the 1.2 billion they made in 2018 and the 1.4 billion they made in 2019 were not actual profit and due to investor funding that wasn't happening and hadn't happened in years. Musk on the other hand has had to do investor funding since purchasing Twitter to keep it afloat.

At the time of purchase twitter had less than 600 million in debt and 2 billion in cash on hand. Their revenue for the final year was -221 million. Since Musk purchased the company they have jumped to over 13 billion in debt, have had to do a funding round of 3 billion to help pay for their debt and apparently seen their revenue cut in half. Twitter is demonstrably in far worse shape now than it was prior to being purchased by Musk and it 100% his doing.

And if you think Twitter's old leadership had an issue with lying bout business then you need to check out the following from Musk:

In 2018 he said he had "secure" enough funding to take Tesla private, he hand't
Production of the Tesla semi was suppled to be in 2020, didn't happen and still behind it's scheduled ramp
A fleet of Tesla robotaxis were supposed to happen in 2020, now he is saying 2024
The Cybertruck was going to be released in late 2021, still not available
Since 2016 Tesla has been charing customers 10k, now15k for full self driving as an add on, but has yet to ship the final product.

You, like the previous poster, could do with some fact checking rather than just accepting the myth of Elon. The only company he has involvement with that is profitable is Tesla. About half of it's profits are due to government credits rather than actual sales. The rest of his companies lose money and exist on investors. Somehow you have managed to get the entire situation backwards. The man is a fraud.

Stabitha_Christie · July 16, 2023 11:00AM

When you buy a company you buy their assets and liabilities. The money you pay goes to thee owners, in the case of Twitter it went to the shareholders.

Twitter had 2 billion in cash and less than 600 million in debt when Musk purchased it. He took out 13 billion in loans when he purchased the company and had Twitter to take on the loans. So the heavy debt load he is taking about is 100% his own doing. Somehow he failed to mention that.

Twitter loses half its ad revenue, still weighed down by debt

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