Elon Musk, the CEO of Tesla and SpaceX as well as the CTO and executive chairman of Twitter, stated early Saturday morning that cash flow remains negative at the social media business due to a roughly 50% decline in advertising revenue combined with “heavy debt.”
“Need to reach positive cash flow before we have the luxury of anything else,” Musk tweeted in response.
Musk purchased Twitter in October of last year for approximately $44 billion, including approximately $13 billion in debt. He sold billions of dollars in Tesla stock to help finance the deal.
By January, hundreds of advertisers had reduced or ceased their ad expenditure on Twitter in response to Musk’s drastic staff cuts and changes to the platform, including the restoration of previously banned accounts and a shift in the platform’s approach to content control.
Musk informed a BBC reporter in April that “almost all” advertisers had resumed purchasing Twitter ads. He also stated at the time that the company was “roughly breakeven,” with the expectation of becoming cash flow positive during the next quarter.
His statement regarding Twitter’s cash flow issues comes just over a month after Linda Yaccarino, who previously headed worldwide advertising for Comcast’s NBCUniversal, took over as CEO. CNBC’s parent company is NBCUniversal.
Insiders in the media industry were encouraged by Yaccarino’s appointment, believing that Twitter will solve urgent difficulties in its ad business.
Twitter has just begun distributing a portion of its ad revenue to certain content creators on its platform. Musk’s comments came in response to questions from followers about why the revenue-sharing program was so limited in scope.
A handful of popular Twitter accounts expressed disappointment that they did not yet qualify to receive money from the scheme. According to The Verge, the revenue-sharing program was only available to users who paid for a Twitter Blue verified subscription, and payments were “driven by ads placed in the replies to tweets.
Influencer Andrew Tate, who promotes misogynistic beliefs online and is currently on trial in Romania on allegations of rape, human trafficking, and organizing a criminal gang to sexually exploit women, said that Twitter paid him more than $20,000. Tate has filed a lawsuit against the accusers.
Several right-wing influencers, as well as supporters and promoters of Tesla stock and products, posted about receiving Twitter payments, including Omar Qazi (who tweets as “@WholeMarsBlog”) and Sawyer Merritt, who both posted about earning more than $5,000.
Brian and Ed Krassenstein, Mr. Beast, and the account @interneth0f (which stands for Internet Hall of Fame) were among the mainstream and other influencers who revealed their Twitter income. The Internet Hall of Fame shares and re-posts screenshots of other people’s popular social media posts.
The overall amount given to creators by Twitter in this first round of rewards is unknown. In response to CNBC’s request for comment on Saturday, Twitter delivered an automated answer with a vulgar symbol. Twitter’s parent company, X Corp., is facing a slew of lawsuits from former workers and vendors for unpaid bills and severance pay.