In his own words, Elon Musk has been "cutting costs like crazy" since his takeover last year of Twitter, in an effort to fend off an expected negative cash flow for the company of about $3 billion in 2023. Now, multiple outlets are adding details on how dire the money situation may be for the social media platform when it comes to advertising, its overwhelming source of income, per the Guardian. The Information reports that around 500 big advertisers have bailed on Twitter since October, while tech blog Platformer notes that the site's daily revenue is down 40% year over year.
The advertiser wariness was jump-started amid the initial chaos of Musk's blue-check verification system, which led to a glut of imposter accounts. Things worsened in advertisers' eyes as previously banned accounts were allowed back on the site and a spike in hate speech was observed. The latest reports arrive right as the bill is coming due for Twitter to start making payments on its almost $13 billion debt, leaving Musk with some "unpalatable options," reports the Financial Times. Sources tell the outlet that the first set of annual interest payments, which could total close to $1.5 billion, may be due by the end of the month.
If Twitter doesn't make this payment, it would join what's been called the "hall of shame" by debt traders—the "no coupon at all," or NCAA, club, in which securities default before making a single payment, per Bloomberg Law. That could in turn lead to bankruptcy proceedings, unless Musk "[settles] the interest from Twitter's dwindling cash reserves or [sells] more equity in the company to fund the payments—both painful options," the Times notes.
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Musk previously sold a chunk of his Tesla shares to come up with the cash to help fund his $44 billion Twitter takeover. Meanwhile, the social media site has entered what Mashable is calling its "BOGO era," in which it's offering to match advertisers up to $250,000. The Wall Street Journal reports that the incentive would require participating companies to run their ads in full by Feb. 28—a window in which promoted tweets could run during Super Bowl week, a "key selling period for Twitter." (More Twitter stories.)
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