Twitter has reportedly lost more than 500 top advertisers since Elon Musk took over the company in late October last year. This has resulted in a sharp decline in its ad business, which is the social network’s primary source of income. According to The Information, Twitter’s daily revenue is currently down by 40 percent from a year ago. The company’s major media partners, however, haven’t parted ways with it just yet.
Twitter may struggle to break even this year
Twitter hasn’t been the same since Elon Musk completed the $44 billion purchase about three months back. While the core services haven’t changed, the platform has undergone many other changes. The new owner laid off more than half of the company’s workforce. Musk also started selling the coveted verification badge (blue tick) and reinstated several banned accounts, including that of former US president Donal trump. He hinted at a more lenient approach toward content moderation, allowing people to speak freely.
All this happened in a somewhat chaotic fashion, tempting many users to leave the platform. Musk himself said that Twitter was losing millions of dollars every day and may be headed toward bankruptcy. This uncertainty made advertisers cautious. Many of them entirely stopped advertising on the platform while some reduced their spending, including Apple, the company’s biggest advertiser. While Apple and a few others have since returned, at least 500 others haven’t.
This has directly affected Twitter’s revenue. In a staff meeting earlier this week, a senior Twitter manager told employees that the company is making 40 percent less money today than it did on the same day last year. The firm made $1.2 billion in revenue in the first quarter of 2022. A 40 percent decline means it would only make about 720 million in the first three months of 2023. At that rate, the social network behemoth may struggle to break even in this year.
Twitter reportedly needs to generate $3 billion in revenue and pay $1.5 billion in annual interest for the debt Musk raised to fund the company’s purchase. That seems a tough ask as things stand. The firm is looking to diversify its revenue sources away from advertising. But with its ad business itself reeling, it may have to look for more cost-cutting measures. We wouldn’t be surprised if Musk further shrinks Twitter’s workforce in the coming months.
Media partners haven’t parted ways with Twitter
Despite all the struggles, Twitter is still too lucrative for media companies to simply ditch it. The platform reportedly has deals with more than three dozen news outlets (including Wall Street Journal, NBCU, Reuters, Axios, Bloomberg, Forbes, Conde Nast, and USA Today), media companies (including NBCU, Paramount, and Disney), and sports leagues (including NFL, NBA, NHL, MLB, NASCAR, and PGA Tour) in the first half of this year.
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