Since billionaire Elon Musk acquired the platform, Twitter has been experiencing persistent growing pains. The social media company’s revenue plummeted by almost 40% in December 2022 amid deflated advertising income. The drop in revenue and earnings was reported in a message to investors. The company is now working to pay off the nearly $13 billion in debt stemming from Musk’s purchase, which has annual interest payments totaling about $1 billion.
According to The Wall Street Journal, 70 of Twitter’s 100 leading advertisers have not spent on the platform since Musk’s takeover. Advertisers reportedly left due to concerns that their ads could appear next to controversial content.
As advertising accounts for around 90% of Twitter’s revenue stream, the company has made several attempts to win them back, including offering free ad space and a spending match of up to $250,000 for promoted ads that would have been set to run during the Super Bowl last month.
Musk also attempted to boost revenue for the platform by rolling out Twitter Blue, a paid subscription to the app that allows users to edit tweets and access exclusive content. However, its initial launch in November was marred by the creation of accounts impersonating notable figures, including large multinational companies and politicians, including former President George W. Bush.
Last 3 months were extremely tough, as had to save Twitter from bankruptcy, while fulfilling essential Tesla & SpaceX duties. Wouldn’t wish that pain on anyone.
Twitter still has challenges, but is now trending to breakeven if we keep at it. Public support is much appreciated!
— Elon Musk (@elonmusk) February 5, 2023
Musk has also been working on cutting costs drastically by cutting thousands of jobs. As of December 2022, Twitter had cut staff from around 8,000 to close to 2,000. The company announced another round of layoffs late last month, but the number of jobs cut was not publicly disclosed. Meanwhile, Musk has tweeted: “Twitter still has challenges, but is now trending to breakeven if we keep at it.”
The drop in revenue and earnings has left Twitter facing significant financial challenges. With a need to pay off the massive debt incurred from Musk’s acquisition, the company must also find new ways to attract advertisers and increase revenue.
While Musk has attempted to turn the platform around, the company’s challenges persist. As a result, the future of Twitter remains uncertain, and investors will be closely watching to see whether the platform can recover and become profitable in the coming months.