Elon Musk says Twitter revenue has dropped 50%, cash flow is still negative

Elon Musk claims Twitter has lost nearly 50 per cent of its advertising revenue since he bought it for $44 billion (about £33.6 billion) in October 2022. To make things worse, Musk said the company's cash flow is still negative due to its heavy debt load.

This announcement aligns with the arrival of Twitter's revenue-sharing program for content creators. To recap, Musk confirmed that the company will start paying verified content creators for ads in their replies last month. The situation has become worse due to this cash outflow.

Also, Musk's decision to temporarily limit the number of tweets users can read in a day added fuel to the fire. As a result, a considerable number of users switched to Meta's Twitter-rival, Threads. This might have also led to a drop in the social media giant's ad revenue.

Unsurprisingly, Threads had a hundred million registered users in just a week. Earlier this month, Musk predicted that Twitter could hit an "all-time record this week." However, the 52-year-old business magnate hasn't proven this claim yet.

Why is Twitter ad revenue falling?

According to Bloomberg's Alicia Diaz, Twitter's advertising business saw an 89 per cent drop in the last two months. A separate report by Reuters suggests the platform pays $1.5 billion (about £1,035,000,000) annually to repay its loan, which was acquired after Musk bought it.

In the wake of the overall situation including Twitter's declining ad revenue, Musk decided to sharply cut costs. However, the company went too far in some cases. For instance, it stopped paying rent for its business offices. Likewise, some Twitter employees sued the company over unpaid bonuses.

In his tweet, Musk admitted that Twitter needs to "reach positive cash flow" before anything else. The company's newly appointed CEO Linda Yaccarinao said Twitter is sparing no effort to establish a new base of advertisers to minimise these negative trends.

It will be interesting to see whether Twitter will manage to come out of this situation. In the meantime, Zuckerberg's Threads is giving the company a run for its money. It is worth noting that Threads has reached a major milestone even without EU users. In fact, Meta is blocking EU users trying to access threads via VPN.

Meta blocking EU-based users from using Threads via VPN

Meta's Threads took the internet by storm when the platform was officially launched earlier this month. It is no secret that the new app is designed to go toe-to-toe with Musk's Twitter. Its limited availability did not stop Threads from becoming a sensation and making an impressive start.

Threads is currently available in more than 100 countries including the UK and the US. However, Meta hasn't launched its well-received app in Europe. In fact, the American technology company is blocking EU users from trying to access Threads via VPN.

Understandably, Threads has piqued the curiosity of many users in Europe. So, some of them are going through the VPN route to get a glimpse of the popular app. Much to their chagrin, it looks like European users will have to wait till Meta decides to launch the app in the region. In its statement to Matt Navarra on Twitter, Meta confirmed that it is blocking users from European countries from using its app via VPN.

Nevertheless, Meta says Europe continues to be a very important market and it is gearing up to bring Threads to more countries in the future. Regrettably, it is still unclear why Meta did not launch Threads in Europe. Perhaps, the company is waiting for the upcoming DMA (Digital Markets Act).

To those unaware, DMA alludes to a new European law that restricts big tech companies that connect users to services, goods, and various content from abusing their market power. So, it is safe to assume that Meta is waiting for the EU to fully disclose DMA and adapt Threads to avoid any problem with the law.