Musk Admits 'Twitter Crisis'... "Advertising Down 50%"

"Cash Flow Still in Negative Territory"
Major Advertisers Massively Depart After Acquisition

[Image source=Yonhap News]

Elon Musk directly revealed that Twitter's advertising revenue has significantly declined.

On the 15th (local time), Musk posted on his Twitter, "We have seen a 50% drop in advertising revenue, and due to debt burdens, cash flow is still negative," adding, "Before enjoying any luxuries, we need to first reach a positive cash flow." This was a reply to a Twitter user who suggested a capital restructuring plan for Twitter's future.

Until April, Musk had been confident. In an interview with the BBC at that time, when pointed out that "many of Twitter's major advertisers have left since you acquired Twitter," he responded, "I cannot disclose names, but they have returned or are expected to return."

This is the first time he has publicly acknowledged the crisis by presenting figures on Twitter's advertising revenue decline. However, Musk did not specify the time period to which the "50% drop" was compared.

Earlier, The New York Times (NYT) reported, "From April to the first week of May, Twitter's U.S. advertising revenue decreased by 59% compared to the same period last year."

After acquiring Twitter for $44 billion (approximately 54 trillion KRW) at the end of October last year, Musk announced "large-scale cost reductions." Subsequently, he laid off half of the 7,500 employees and cut employee meal expenses. However, Musk's decisions backfired. Controversies arose over layoffs without prior notice, leading to a mass exodus of advertisers and a rapid deterioration of Twitter's financial condition.

In January, Forbes reported, "After Musk's acquisition, over 500 major advertisers left, resulting in a loss of $270 million (approximately 330 billion KRW) in just October to December last year."

In response, Twitter auctioned off hundreds of items from its San Francisco headquarters. Among the items was a bluebird-shaped sculpture, the Twitter logo. This sculpture, standing 1.2 meters tall, was sold for $100,000 (approximately 123.5 million KRW). Additionally, a 3-meter tall Twitter neon sign sold for $40,000 (approximately 49 million KRW), and a conference table made from reclaimed wood was sold for $10,500 (approximately 13 million KRW).

To boost Twitter's advertising performance, Musk hired Linda Yaccarino, former head of advertising at NBCUniversal, as CEO last month. However, clear results have yet to be seen.

Moreover, recently, Meta, the parent company of Facebook, declared competition with Twitter by launching a new social media (SNS) platform called Threads. Threads surpassed 100 million users on the 9th, creating a sensation and eyeing Twitter's advertising market. Experts predict that if Threads users are confirmed to be actively using the platform, advertisers leaving Twitter may massively shift to Threads.

Natasha Blakenship, Vice President of online advertising agency Tinuiti, said in a recent interview with economic media CNBC, "Many companies that stopped advertising on Twitter due to concerns over corporate image deterioration caused by increased racial discrimination and hate speech after Musk's acquisition are showing interest in Threads."

This content was produced with the assistance of AI translation services.