• Twitter’s advertising revenue has plummeted by nearly half.
• Musk had previously laid off around half of Twitter’s workforce to reduce cost.
• Twitter is burdened by heavy debt and negative cash flow.

Twitter’s advertising revenue has plummeted by nearly half since being acquired by Elon Musk for $44 billion in October of last year, according to the company’s owner. The expected increase in sales did not materialize in June, but July shows some signs of improvement. Musk had previously laid off around half of Twitter’s workforce to reduce costs after taking over in 2022.

Rival app Threads, with an estimated 150 million users, poses a challenge for Twitter. Threads’ connection to Instagram gives the Meta-designed platform access to a potential two billion users. In contrast, Twitter is burdened by heavy debt and negative cash flow, prompting Musk to prioritize achieving positive cash flow before pursuing other objectives.

While some believe Musk will eventually turn Twitter around, he faces the task of repaying $13 billion of debt by the end of July, which may put additional pressure on Tesla shares if he needs to sell more of his stake. Despite cost-cutting measures, Twitter’s aggressive content moderation changes have failed to lure back advertisers who had left the platform.

Linda Yaccarino, former head of advertising at NBCUniversal, took on the role of Twitter’s CEO in June, indicating that advertising sales remain a top priority. Twitter aims to focus on video, creator and commerce partnerships, engaging in early discussions with political and entertainment figures, payments services, as well as news and media publishers.

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