Twitter recorded a 40% drop in revenue in December, casting tension on expectations that the platform will hit huge fiscal success in 2023. According to the Wall Street Journal, the social media company sent a message to investors informing them of a year-to-year drop in not only revenue from the previous year but also adjusted earnings.
Twitter’s revenue and adjusted earnings fell about 40% in December. Many advertisers ditched the company after Musk’s takeover. https://t.co/nG4ijk52Zz
— The Wall Street Journal (@WSJ) March 4, 2023
This report comes as Twitter is faced with an annual interest payment estimated at $1 billion from the nearly $13 billion in debt used to finance Elon Musk’s purchase of the company.
The company’s drop in revenue is the result of the reduction of advertisers the platform experienced after CEO Elon Musk purchased the company last year.
The transfer of Twitter’s ownership to Musk saw a mass abandonment of the platform, with research firm Pathmatics reporting that about 70% of the platform’s advertisers have not employed its services since Musk’s acquisition as of Feb. 25.
Per the Wall Street Journal, advertisers fear that Twitter would tag their content as some sort of controversial content. Musk, however, said in November that the fear is planted in advertisers’ minds by activist groups who he says are falsely leading advertisers to think that he has made changes to content moderation.
Search Engine Journal reported in January that over 500 of Twitter’s top advertisers stopped spending on the platform since Musk’s acquisition. Some of the advertisers that pulled out of the platform include food company Nestle and ketchup manufacturer Heinz.
The decline of Twitter’s advertising has the company making several attempts to revive the business, as about 90% of the platform’s revenue comes from advertising. Earlier this year, the company came up with an incentive of free ad space that would match advertisers’ ad spending of up to $250,000.
Another move aimed at raising revenue for the company is Twitter Blue, a paid plan that allows subscribers to edit tweets and access exclusive content. However, that has not seen much success, having garnered a less-than-expected amount of subscribers in the U.S. two months after launch.
Amid the revenue crisis, Twitter has undergone a massive cost-cutting operation that has seen the loss of thousands of jobs. As of December 2022, the company’s staff force was reduced by about 6,000 from the number of employees on the company’s payroll prior to Musk’s acquisition.
During the last weekend of February, the company announced it had carried out another round of layoffs. However, it did not specify the number of workers affected.