Twitter’s profitability in jeopardy as advertisers exit the platform

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Twitter’s advertising revenue has reportedly dropped by 40% from the previous year. According to The Information, more than 500 of Twitter’s significant advertisers have halted spending on the platform since Elon Musk took over in October. Despite this, the platform continues to attract and retain media deals as the revenue generated needs to be more valuable for them to abandon.

Despite Musk’s plan to shift Twitter’s focus away from advertising, the company will likely need help to become profitable this year. As Twitter generated $1.2 billion in the first quarter of 2022, a 40% drop would mean it earns around $8 million daily (and about $720 million for the quarter). Whether Twitter can become profitable this year will depend on its capacity to generate $3 billion in revenue while paying $1.5 billion in annual interest on the debt Musk incurred for the acquisition.

The fall in advertising income could result in additional cost-saving measures. Some significant advertisers are reportedly dissatisfied with Musk’s approach to content moderation, such as reinstating Donald Trump and dismissing executives responsible for reducing hate speech. Twitter’s workforce has already been reduced by about 75% since Musk’s takeover, and additional layoffs may occur if the decline in revenue continues.

Despite the advertising struggles, Twitter can take some comfort in attracting and retaining media partners. As reported by Axios, the platform still maintains contracts with over three dozen media companies, news outlets, and sports leagues during the first half of this year. These include well-known names such as Wall Street Journal, Reuters, Bloomberg, Forbes, Conde Nast, and USA Today. They find Twitter too valuable to give up in an uncertain economy, even if they are hesitant to support it publicly.

 

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