In recent news, The Wall Street Journal has reported that Twitter’s earnings and revenue in December have dropped by about 40% from the previous year, citing “people familiar with the matter.” This news has raised concerns among investors, who are questioning the social media giant’s future prospects.
Twitter’s Financial Troubles
Twitter is currently facing annual interest payments estimated at over $1 billion. Since Elon Musk acquired it in October, the company has also struggled to retain advertisers amid recession fears and industry leaders expressing concern about lackluster content moderation. The company’s debt carries an annual interest rate of almost 15%, further affecting its financial troubles.
Ad Sales Drop
More than 70 of Twitter’s top 100 advertisers prior to the takeover weren’t spending any money on ads as of Feb. 25, including ketchup maker Heinz and food company Nestle, which reportedly pulled all advertising from the platform. In 2019, the last year Twitter booked an annual profit, and 2022, ad sales made up more than 90% of the company’s revenue.
Twitter’s financial troubles are further affected by lower-than-expected subscribers to its paid verification system Twitter Blue, with only 180,000 US subscribers two months after its November relaunch.
Elon Musk’s Plans for Twitter
Despite Twitter’s earnings troubles, Musk tweeted in February that he expects Twitter’s finances to improve and for the company to ultimately break even this year. “Twitter still has challenges, but is now trending to breakeven if we keep at it,” he said at the time.
In recent months, Musk has embarked on a massive cost-cutting operation. Its total staff count is now less than a quarter of what it was before he became CEO after layoffs that are still ongoing. In another reported move to cut costs, Twitter employees lost access to Slack, while Musk has moved to shut down a Sacramento data center, lay off janitorial and cleaning staff at its various US buildings, and close its Seattle office.
What This Means for Twitter’s Future
Twitter’s recent struggles have led to concerns among investors, with many questioning the company’s future prospects. Despite Musk’s plans to turn things around, it remains to be seen whether Twitter can regain its footing and become profitable again.
Read more; TWITTER’S BLUE VERIFIED RELAUNCH HAS BEEN PUT ON HOLD BY ELON MUSK
In conclusion, Twitter’s earnings and revenue drop in December has raised concerns among investors, who are questioning the social media giant’s future prospects. With annual interest payments estimated at over $1 billion and ad sales dropping, Twitter’s financial troubles are further affected by lower-than-expected subscribers to its paid verification system. Despite Musk’s plans to turn things around, it remains to be seen whether Twitter can regain its footing and become profitable again.