Twitter hit by 40% revenue drop amid ad squeeze after Musk takeover

Twitter hit by 40% revenue drop amid ad squeeze after Musk takeover

19 Jan    Finance News, News

Twitter remains in the grip of an advertising squeeze, with the social media platform hit by a 40% drop in revenue after more than 500 clients paused their spending, according to reports.

The company’s daily revenue was down 40% year-over-year, the tech newsletter the Platformer reported, while the news site the Information said staff were told more than 500 of Twitter’s top advertisers had halted spending since Elon Musk bought it in October.

Advertising is the main source of income for Twitter, accounting for more than 90% of its $5.1bn in revenue in 2021, but clients including Audi and Pfizer are among the firms that have paused after the Tesla CEO’s $44bn (£35bn) takeover.

Concerns about an increase in hate speech on the platform after its acquisition by a self-described “free speech absolutist” have prompted advertisers to withdraw in droves. They have also been alarmed by a spate of impersonator accounts that flourished on the site after a botched relaunch of its blue tick scheme for verified users.

Giving more detail on the 40% figure, the Information reported that a senior Twitter manager had told staff on Tuesday that the revenue for that day was 40% lower than the same day a year ago.

And in a further report on Wednesday, the Information said that Twitter’s revenue for the fourth quarter alone fell about 35%, according to details shared at an internal staff meeting.

The reports came as the Financial Times reported that Twitter was due to make payments on its near-$13bn debt burden as soon as the end of this month, with Musk considering options including selling more of his shares in Tesla or even putting Twitter into bankruptcy protection. Musk sold more than $20bn worth of shares in Tesla last year to help finance the Twitter deal.

He said in December that Twitter was facing a “negative cashflow situation of $3bn a year” but claimed the company should “roughly” reach cashflow break-even after cost-cutting efforts, including the departure of more than 5,000 staff. He also said last month that the company was “not on the fast lane to bankruptcy any more”, having warned in the immediate aftermath of his takeover that Twitter was in danger of going bust.

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