Twitter owner Elon Musk said the social media company's advertising revenue has plunged roughly 50%, highlighting his struggle to revive the ailing company after buying it for $44 billion.
The stark admission came in response to a comment by another Twitter user who suggested the billionaire form a consortium to buy the platform's debt.
"Need to reach positive cash flow before we have the luxury of anything else," the billionaire replied on Saturday.
Twitter's ad-portal traffic plunged 20.6% in June 2023 from the year before, according to data from Similarweb, which analyzes advertising portals as "an indicator of business momentum." Overall traffic on the platform has declined steadily since January, falling 5.8% as of June. Engagement on Twitter's app also fell during that same period, from roughly 88 million users to 83 million, or 5.5%.
Musk, who purchased Twitter in 2022, said in March that he believed the platform would break even or perhaps even see a positive cash flow by June of this year, the Financial Times reported.
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
Meanwhile, Meta this month debuted a social media app called Threads that the social media giant describes as "Instagram's text-based conversation app."
The new service, which reached more than 100 million signups the first weekend after its release, has been dubbed the "Twitter killer" by some social media users because of the expectation that many people will migrate away from Twitter in favor of the new social media service.
"It seems like some more negative sentiment [among users and advertisers] has set in," Similarweb Senior Insights Manager David Carr told CBS MoneyWatch. "People are saying, 'I don't know if we need to be [on Twitter] anymore.'"
To be sure, Twitter was experiencing operational challenges long before its acquisition by Musk. Since taking control of the reins, however, Musk has been making changes to the social network that have driven away advertisers and alienated some users.
"[Musk] just changed the rules ... and a lot of people just got exhausted with it," Futurum CEO Daniel Newman told CBS MoneyWatch.
One of the first alterations to Twitter imposed by the outspoken tech billionaire and self-described "free speech absolutist" was to roll back content moderation, a move that a Tufts University study found fueled a rise in hate speech on the platform. He also reinstated previously banned accounts of polarizing public figures including former President Donald Trump and Rep. Marjorie Taylor Greene.
"You have a divisive leader, questionable politics from the person that runs the company…[and] a subset of other potential alternatives that have come into the market," Newman said. "You put those all together and you get a [traffic] decline."
Musk's recent decision to temporarily throttle usage for some nonpaying members, limiting free accounts to reading 600 tweets per day, sparked intense backlash.
"[The rate limit] was spitting in the face of the most active and engaged users," Carr said. "That gives people a reason to go, 'you know, I'm going to check out this Mastodon thing I've been hearing,'or 'I'm going to try and get on the Bluesky waitlist.'"
On the Sunday after Twitter announced rate limits on free accounts, traffic on competitor Mastodon's website, mastodon.social, shot up 18%, Similarweb data shows. Traffic on the waitlist website for Bluesky Social, another Twitter rival, peaked at more than 750,000 daily visits during that same weekend, up from less than 100,000 views a day prior to Twitter's rate-limit announcement.
Not all Twitter's changes under Musk have sent people running, however. During the past year, Twitter introduced an edit button and increased the character limit for tweets. Those features, however, are only available to account holders who pay between $8 and $11 a month for Twitter Blue, the platform's subscription service, which may have driven some users away, Newman said.
And while Twitter copycats may momentarily drive declines in Twitter's traffic, it's too soon to tell how long that drop will last, according to Newman.
Attracting the number of users and types of breaking news content that made Twitter popular with journalists and news junkies will not be easy, he said. And while Threads garnered more than 100 million sign-ups just days after its launch on July 5, some stats indicate that user interest in the app may be dropping off.
Threads users spent an average of 7 minutes on the app on July 11, down from 21 minutes on July 6, the day after the app launched, Similarweb data shows.
"It's very early to suggest that Meta is going to take down Twitter," Newman said. "If a $20 billion early loss in value can't take [Twitter] down, I don't know what will."