Questions are swirling about the health of Twitter Inc.'s ad business. Since taking over Twitter, Elon Musk has faced an exodus of executives and advertisers.
Nearly three months as 'Chief Twit,' Musk's social media platform might be experiencing a significant decline in daily ad revenue and hundreds of top advertisers paused spending.
The Information reported that a senior Twitter manager told staff on Tuesday that more than 500 of Twitter's top advertisers have paused spending since Musk bought the company on October 27.
An alarming crisis is festering in the company's core ads business. Siddharth Rao, a manager supervising the engineers working on Twitter's ad business, also told employees that daily revenue plunged 40% versus the same day a year ago, according to a person with direct knowledge of the matter.
"While Musk plans to diversify Twitter's revenue away from ads in the long run, continued deterioration of that business will make it harder for the company to break even on a free cash flow basis in 2023 as Musk predicted it would three weeks ago," The Information said.
Musk reduced the company's headcount by thousands of employees to supplement sliding ad revenue and quickly pushed a paid verification subscription for users.
However, Axios reported under Musk's leadership, the social media company has secured content sponsorship deals with three dozen news outlets, media companies, and sports leagues.
This year, almost all of the major sports leagues, including the NFL, NBA, NHL, MLB, NASCAR, PGA Tour and more, plan to run content deals on Twitter around regular season games and tentpole events, like March Madness, NBA Playoffs and the Super Bowl, according to the schedule seen by Axios.
Twitter makes most of its money through advertising and now user subscriptions. It remains to be seen if Musk's radical overhaul of the social media platform will be successful.