Elon Musk has offered a tiny bit of insight into the financial performance of Twitter, which has been engulfed in chaos since his acquisition late October 2022.

Reuters reported Musk as saying on Tuesday that the company had “a shot” at being cash flow-positive next quarter, as the social media platform has been aggressively cutting costs. But he admitted that advertising revenue has seen a “massive decline.”

It comes after Musk this week issued an apology to a disabled Twitter director, after he mocked him when he asked the Twitter CEO if he had been fired.

Image credit: SpaceX

Cash flow-positive

According to Reuters, Musk made his comments about Twitter’s financial prospects in the next quarter when he was speaking at a Morgan Stanley investor conference.

Musk reportedly said it was “startling” how poorly Twitter managed to make money off its messaging service.

The company has reduced its non-debt expenditures to $1.5 billion from a projected $4.5 billion in 2023, helped by cutting its cloud services bill by 40 percent and closing one data centre, Musk reportedly said.

Twitter has also laid off thousands of its workforce, and is said to have less than 500 engineers left.

Musk acquired Twitter for $44 billion in late October, but he saddled the firm with annual interest payments of about $1.5 billion as a result of the debt it took on.

Musk added that Twitter has been hit by a “massive decline in advertising,” some of which he said was due to the cyclical nature of ad spending and some of which was “political.”

Chaotic takeover

It is fair to say that Twitter has been marked by chaos and uncertainty since the acquisition by Musk.

On Monday, Twitter suffered a bug that prevented thousands of users from accessing links – its sixth major outage since the beginning of the year.

Musk said in reference to Monday’s outage that what had been intended as a small change to 1 percent of users ended up being a “catastrophic” change for all. He added that engineers were doing a lot of “clean up” in general of the Twitter software code.

Musk also reiterated his plans to introduce payments on Twitter, and said he envisions users could eventually send money to each other with one click.

“I think it’s possible to become the biggest financial institution in the world,” he was quoted by Reuters as saying.

Making ads more relevant on the platform is another focus for the company, he said.

Musk reportedly said at Tuesday’s Morgan Stanley event that both Democrats and Republicans now trust Twitter to the same degree. The platform had 253 million daily active users that were “monetisable” in the fourth quarter, according to a slide displayed during the webcast.

Musk said Twitter currently earns 5 to 6 cents per hour with users spending a combined “130 million hours of their time per day” on the platform. He said the company could increase it to 15 to 20 cents.

Ad revenues

Musk’s assertion that Twitter’s massive decline in ad revenues was either down to the cyclical nature of ad spending and some of which was “political”, may rise eyebrows in some quarters.

Corporate advertisers fled in response to Musk’s botched relaunch of Twitter’s paid verification feature, that resulted in scammers impersonating companies on Twitter.

Fourteen of the top 30 advertisers on Twitter stopped all advertising on the platform after Musk took charge, Pathmatics have previously estimated.

In January a senior manager at Twitter told the remaining staff that the company’s daily revenue on Tuesday 17 January was 40 percent lower than the same day a year ago.

And to make matters worse, during the staff meeting Siddharth Rao, an engineering manager overseeing the engineers working on Twitter’s ad business, reportedly told staff in a presentation that more than 500 of Twitter’s top advertisers have paused spending on Twitter since Elon Musk took over in October.

Advertising of course is Twitter’s main source of revenue, accounting for 90 percent of its $5.1bn turnover in 2021.

Then data from an advertising research firm Standard Media Index (SMI) showed that top advertisers are continuing to slash their spending on the platform after Elon Musk’s 27 October takeover, and that ad spending on the platform had fallen over 70 percent in December.

These reports came after Twitter began auctioning off its office furniture, as well as its fixtures and fittings from its San Francisco headquarters.

Musk has previously raised the possibility of the platform going bankrupt during his first mass email with the platform’s remaining staff soon after his takeover.

A sign of financial strain at Twitter emerged recently when a landlord in San Francisco sued Twitter over failing to pay rent on its headquarters in the city.

Last month Crown Estates in the UK sued Twitter over unpaid rent relating to its Piccadilly Circus-based headquarters building.

Twitter has also been sued for failing to pay for two charter flights.

Amazon Web Services also recently refused to pay Twitter for its ads, after Twitter failed to pay a contractual bill.

Musk’s Twitter is said to be $70m behind on AWS payments.

Tom Jowitt

Tom Jowitt is a leading British tech freelancer and long standing contributor to Silicon UK. He is also a bit of a Lord of the Rings nut...

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