Twitter in serious trouble with revenue down by 40%.
Elon Musk makes it a point to appear as though everything is fine, but it appears that things are not quite cozy on Twitter. Various reports claim that Twitter’s revenue is down 40% from the previous year. This is in light of a dramatic decline in online advertising. It appears like many of Twitter’s old advertising partners have left the firm since the start of Elon Musk’s aggressive takeover and all the scandals that followed his effective appropriation.
According to a recent Reuters article, Twitter lost 14 of its top 30 advertisers. The primary source of income for the business was greatly shocked. After Musk assumed leadership of Twitter on October 27, most of the advertisers departed. Four advertisers also cut their spending from the week prior to Musk’s acquisition until the end of 2022 by between 92% and 98.7%. The top 30 businesses reduced their overall advertising spending by 42%, to an estimated $53.8 million for November and December. Although six of them boosted their spending, it was insufficient.
Twitter in serious trouble with revenue down by 40%
Twitter may feel that its current financial situation makes it impossible for it to operate. When Musk took over, Twitter was losing $4 million every day. Now, that loss has stopped. Due to the fact that it also took on a substantially bigger debt load in the Musk acquisition, it is still losing money. Twitter generated $1.57 billion in revenue in Q4 2021. If the corporation is currently down 40% from its performance, Q4 2022 revenue was only $942 million. That is a significant drop, and Musk must stop the bleeding.
That explains why the business is eliminating all costs and shutting down its platform. Since Musk’s purchase, Elon has let go of a number of people. He claimed that was adequate to reduce spending by around $950 million. The business also unveiled the updated Twitter Blue, which will serve as a new revenue-generating tool for Twitter. To pay $8 a month, about 225,000 customers have signed up. Given this figure, Twitter will get $1.8 million in subscription fees. That is obviously not much, but it’s better than failing. Twitter decided to outlaw all third-party clients more recently.
Fenix and Twitterriffic, two widely used apps, are no longer functional. The business shut down its API and no longer permits developers to release forks of the original app. Naturally, the fundamental justification for that action is that Twitter was unable to make money from the advertisements in these third-party apps.
The Social media app looks for further ways to monetize
The debt left over from Musk’s takeover is one of the major problems for social media. Tesla’s CEO took out $13 billion in loans to buy the business. Now, it’s Twitter’s responsibility to pay back these loans at an estimated pace of $1.5 billion year, not Musk’s. There isn’t enough cash on hand to cover this bill given the $940 million in revenue. The corporation is operating at a $1.7 million daily loss after all modifications. Although it’s an improvement over the prior $4 million per day loss, it’s still far from ideal. If Musk’s company can’t find other sources of income, it might go out of business.
The Twitter Blue verification system was the focus of the hopes. The limited number of users that signed it, though, indicates that this isn’t the best course of action. Unless you actually require that verification icon, choosing Blue currently doesn’t offer many advantages. We won’t see all users rushing to subscribe until it becomes a “must.” Additionally, social media is developing a mechanism for monetizing video as well as a new subscription service for businesses. It’s uncertain, though, if these will also be able to offset the current losses.
Due to his contentious actions at Twitter, Elon Musk is also having issues at Tesla. The EV company’s market worth has drastically fallen since his takeover. The business has now revealed a number of initiatives to draw in more clients.