Elon Musk Admits Twitter Lost 50% Of Ad Revenue, Says Cash Flow Still Negative

Twitter owner Elon Musk said the company still has a negative cash flow because of its heavy debt load and a roughly 50% drop in advertising revenue.

The social media site will "need to reach positive cash flow before we have the luxury of anything else," Musk said in a tweet. Separately, the billionaire announced late Saturday the platform will increase the number of tweets verified accounts can see each day by 50%, following complaints from users.

We're still negative cash flow, due to ~50% drop in advertising revenue plus heavy debt load. Need to reach positive cash flow before we have the luxury of anything else.

— Elon Musk (@elonmusk) July 15, 2023

Several top advertisers paused spending on the platform after Musk acquired the company last year over concerns about changes the billionaire could make. Earlier this year, Musk said that many of the advertisers who fled had returned, and that becoming cash-flow positive was imminent.

"Almost all of them have either come back or said they're coming back," Musk said in a Twitter Spaces in April.

Advertiser spending dropped 89% to $7.6 million over a two-month period early this year, according to estimates for market research firm Sensor Tower. The top 10 advertisers had spent $71 million on ads from September to October of 2022, ahead of Musk's acquisition.

Meta Platforms Inc.'s Mark Zuckerberg released his own Twitter competitor this month, Threads, which rapidly reached 100 million users in the days after its launch. Some lawmakers have transitioned over to the alternative platform, but are still wary about committing to it.

Days before the launch of Threads, Twitter sparked a backlash from users after the site imposed a temporary cap on the number of tweets that accounts can see each day. The limit had initially been set at 600 of unverified users, and 6,000 for verified accounts, before eventually being lifted to 1,000 and 10,000, respectively.

The latest increase suggest verified users will now be able to see 15,000 posts, though Musk didn't specify.  

We will increase the rate limit for verified users by 50%. Should take effect within a few hours.

— Elon Musk (@elonmusk) July 16, 2023

Musk purchased the social media company for $44 billion in late October 2022. He has since made several changes to the product and company structure, many of which he attributes to decreasing the company's cash burn and debt burden.

The firm laid off thousands of employees in the wake of the deal. Among other changes, Musk introduced Twitter Blue, which allows users to verify their identity for $8 per month, and debuted ways for users to monetize their content.