Twitter hasn't become cash flow positive yet, Elon Musk has confirmed, with a "heavy debt load" and advertising revenue dropping to half its usual amount not helping matters for the billionaire.
Elon Musk
In March, Musk offered a prediction that Twitter had a chance of being cash flow positive by the second quarter of 2023. In a Saturday tweet, Musk admits the micro-blogging site hasn't met the mark.
In response to a question about refactoring debt, Musk "We're still negative cash flow, due to ~50% drop in advertising revenue plus heavy debt load." Twitter needs to "reach positive cash flow before we have the luxury of anything else," he added.
Twitter's problems stem from a number of issues compounding the problem. For a start, the "heavy debt load" is caused by interest payments on debt Twitter took on when Musk acquired it and took it private.
Reuters, the annual interest payments cost Twitter around $1.5 billion.
The 50% drop in ad revenue is also an issue for the company, which has stumbled in its relationship with advertisers post-acquisition. This period allegedly included Apple as an advertiser who apparently veered away from Twitter, but later made a return.
Twitter has also undertaken a severe cost-cutting initiative, including multiple mass layoffs of employees, and in some cases, failing to pay .
Musk's comments surface as Twitter is under attack from Threads, a rival platform that has seen considerable short-term success. Naturally, shortly after launch, Twitter threatened to sue Meta for copying it.