Sunday, August 3, 2025

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Is Twitter Broke? (Part 2)

Elon Musk recently revealed that Twitter’s cashflow remains in the negative territory due to a significant drop of nearly 50% in advertising revenue and the burden of heavy debt. Musk’s statement falls short of his earlier expectation in March, where he anticipated Twitter to achieve positive cashflow by June.

In response to suggestions on recapitalization, Musk tweeted, “[We] need to reach positive cashflow before we have the luxury of anything else.”

He further mentioned that Twitter did not witness the anticipated increase in advertising revenue during June but expressed a more optimistic outlook for July. Additionally, Musk pointed out that Twitter Spaces, the audio-based feature, has yet to generate any revenue and currently operates at a cost.

These recent developments indicate that the aggressive cost-cutting measures implemented since Musk acquired Twitter in October have not been sufficient to achieve positive cashflow. It also raises questions about the pace of recovery in Twitter’s ad revenue, as Musk had previously indicated in an interview with the BBC in April that most advertisers had returned to the platform.

In efforts to reduce expenditures, Twitter laid off numerous employees and cut cloud service bills. Musk stated that non-debt expenditures have been reduced to $1.5 billion from the projected $4.5 billion in 2023. However, the company still faces annual interest payments of approximately $1.5 billion due to the debt incurred from the $44 billion deal that took Twitter private.

The timeframe for the mentioned 50% drop in ad revenue remains unclear. Musk previously mentioned that Twitter was expected to generate $3 billion in revenue for 2023, down from $5.1 billion in 2021.

Twitter has faced criticism for lax content moderation, resulting in the departure of several advertisers who were concerned about their ads appearing alongside inappropriate content.

Musk’s recent appointment of Linda Yaccarino, former ad chief at Comcast’s NBCUniversal, as CEO signals a focus on improving ad sales while also working on increasing subscription revenue. Yaccarino, who joined Twitter in early June, has informed investors of the company’s plans to concentrate on video, creator and commerce partnerships. Additionally, Twitter is engaging in preliminary discussions with political and entertainment figures, payment services, and news and media publishers.

In an attempt to attract more content creators, Twitter announced that select creators will be eligible to receive a share of the ad revenue generated by the company.


Information for this story was found via The Guardian and the sources mentioned. The author has no securities or affiliations related to the organizations discussed. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

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