Elon Musk, the owner of Twitter, recently revealed that the company’s advertising revenue has plummeted by approximately 50%. This admission underscores the challenges Musk faces in revitalizing the struggling company that he acquired for $44 billion.
Musk made this stark statement in response to a suggestion from another Twitter user that he form a consortium to purchase the platform’s debt. He replied, “We need to attain positive cash flow before we can focus on anything else.”
According to data from Similarweb, Twitter’s ad-portal traffic experienced a drastic decline of 20.6% in June 2023 compared to the previous year. Similarweb considers this decline as an indicator of business momentum. Overall, the platform’s traffic has steadily decreased by 5.8% since January. Engagement on Twitter’s app also witnessed a decline, dropping from approximately 88 million users to 83 million, which accounts for a 5.5% decrease.
In March, Musk expressed his belief that Twitter would break even or even achieve positive cash flow by June of this year. However, Musk’s recent tweet stated that Twitter is still experiencing negative cash flow due to the significant drop in advertising revenue and substantial debt load.
Threads Enters the Chat
Meanwhile, Meta recently introduced a new social media app called Threads, which they describe as “Instagram’s text-based conversation app.” The app garnered over 100 million signups during its first weekend, leading some social media users to dub it the “Twitter killer,” as they anticipate many people migrating away from Twitter to this new service.
“More negative sentiment has emerged among users and advertisers,” said David Carr, the Senior Insights Manager at Similarweb. “People are questioning whether they need to be on Twitter anymore.”
Driving Users to Competitors
While Twitter had been facing operational challenges prior to Musk’s acquisition, his changes to the social network have driven away advertisers and alienated some users. One of Musk’s first alterations was to roll back content moderation, resulting in a rise in hate speech on the platform. He also reinstated previously banned accounts of controversial public figures, including former President Donald Trump and Rep. Marjorie Taylor Greene.
According to Futurum CEO Daniel Newman, “Musk changed the rules, and many people became exhausted with it.” The combination of divisive leadership, questionable politics from Musk, and the emergence of alternative platforms has contributed to the decline in traffic on Twitter.
Musk’s recent decision to temporarily limit usage for non-paying members by imposing rate limits sparked intense backlash. This move gave users a reason to explore other platforms like Mastodon and Bluesky Social.
Following Twitter’s rate-limit announcement, traffic on Mastodon’s website increased by 18%, and the waitlist website for Bluesky Social experienced over 750,000 daily visits.
Still the Reigning Platform
Despite the changes made by Musk, not all of them have driven users away. Twitter introduced features like an edit button and increased character limit for tweets, which are available to paying account holders of Twitter Blue, the platform’s subscription service. However, these changes may have contributed to some users’ departure.
According to Newman, it’s too soon to determine how long the drop in Twitter’s traffic caused by Twitter copycats will last. The challenge lies in attracting the number of users and breaking news content that originally made Twitter popular with journalists and news enthusiasts.
While Threads initially gained over 100 million signups, user interest appears to be declining, with an average session time of 7 minutes on July 11 compared to 21 minutes on July 6, the day after its launch.
Newman concluded, “It’s too early to suggest that Meta will take down Twitter. If a $20 billion loss in value couldn’t bring Twitter down, I don’t know what will.”
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