Elon Musk Confirms Twitter's Negative Cash Flow—Here's the Reason Behind Its Heavy Debt

On Saturday, July 15, Elon Musk confirmed that Twitter has a negative cash flow.

Via its official Twitter account, the billionaire explained why the social media giant's revenue is declining.

Elon Musk Confirms Twitter's Negative Cash Flow

(Photo: Scott Olson/Getty Images) In this photo illustration, Florida Gov. Ron DeSantis joins Elon Musk on Twitter Spaces to formally announce his run for the Republican nomination for president on May 24, 2023, in Chicago, Illinois. The announcement was hampered by technical difficulties as more than a half million people signed on to listen.

According to ABC News' latest report, Twitter has a negative cash flow because of a heavy debt load.

Another reason behind the platform's revenue decline is the decreasing advertising revenue.
"We're still negative cash flow, due to ~50% drop in advertising revenue plus heavy debt load," said Elon via his Twitter account.

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

He explained that Twitter's cash flow needs to become positive before they can start doing "luxurious" changes on the platform.

Advertising companies started to leave Twitter after Elon Musk acquired it for $44 billion.

One of their major concerns is the ability of Twitter to maintain the social media platform after terminating around 75% of its workforce.

Aside from this, ad companies are also concerned about the harmful content on Twitter since Elon Musk is trying to make the platform completely free-speech.

Of course, controversies linked to Elon Musk are also among the major concerns of advertising businesses.

Should Twitter Worry About Threads?

(Photo: SAMUEL CORUM/AFP via Getty Images) This illustration photo taken on August 5, 2022, shows a cellphone displaying a photo of Elon Musk placed on a computer monitor filled with Twitter logos in Washington, DC. - Elon Musk has accused Twitter of fraud, alleging the social media platform misled him about key aspects of its business before he agreed to a $44 billion buyout, as their court battle heats up.

Since Twitter's cash flow is still negative, the arrival of Threads could pressure the platform when it comes to attracting advertisers.

CNBC reported that while Twitter's business worsens, many advertisers are hoping that Threads will become a great social media platform they can rely on for advertising.

Tinuiti Vice President Natasha Blumenkron said that Meta's new Threads app is one of the hot topics of their paid social for marketing firm's clients.

Aside from Blumenkron, MikMak's CEO Rachel Tipograph also said that their marketing technology firm's clients are considering advertising on Threads.

Their statements show that Meta's rising social media platform is now getting the attention of many ad companies.

But, it is still too early to conclude that Threads will be the new advertising hub. You can visit this link to learn more about what advertising firms think about the new Twitter competitor.