Elon Musk says nearly all of those hundreds of advertisers who stopped spending money on Twitter in recent months have returned. Well if they have, they’re not spending any money.
A report by The New York Times found that Twitter’s ad revenue from April to May was only $88 million, a nearly 60% drop from a year earlier. Which is it? We read both of those statements on the internet. So they must both be true, right?
‘I Don’t Care’
After some legal hiccups, Musk bought Twitter in October for a monumental $44 billion. Fearing it would become a breeding ground for misinformation, hate speech, and good old-fashioned trolls, popular celebrities and news networks left Twitter, while companies like General Mills, United Airlines, and Audi paused their ad spending. Most CEOs would be pulling at their collars and asking “is it hot in here,” but Musk of course is not your typical CEO. His response has been a very apathetic and very Gen X “meh.”
Twitter may well go on to become the everything app, known simply as X, that Musk envisions. But until then, it’ll remain a playground for him to say whatever he wants, whether that’s comparing George Soros to the X-Men supervillain Magneto, or joking that he’s taking Tesla private at $420 a share — a blunder that cost him $40 million in SEC fines but he says was totally worth it. Last month, during an interview with NBC, he was asked why he was willing to risk hurting Twitter’s bottom line. By way of an answer, he referenced a scene in The Princess Bride where Spanish swordsman Inigo Montoya finally confronts his father’s murderer and says not all the money or power in the world could keep him from delivering the killing blow. “I’ll say what I want to say, and if the consequence of that is losing money, so be it,” Musk, who has a net worth of over $200 billion according to Barron’s, told NBC.
Well, losing money he is:
- Such a drastic dive in ad sales is usually not good for a company that historically earns 90% of its revenue from advertisements. While overall ad sales are down, the NYT reported that Twitter is now marketing businesses it used to avoid like online gambling, marijuana products, and erectile dysfunction meds.
- In less than a year, Twitter’s valuation has dropped to $15 billion, roughly one-third of Musk’s original purchase price, according to asset manager Fidelity.
A New Face that Runs the Place: Even the advertisers who want to be on Twitter have difficulty contacting the platform’s office, likely a product of Musk cutting 80% of the staff. The hope is that Twitter’s prospective CEO, Linda Yaccarino, will correct course, win back advertisers, and turn the platform into a money maker again. “For a period, we weren’t even sure who to get on the phone with to talk to,” Dave Campanelli, the chief investment officer of Horizon Media, told the NYT. “With Linda coming in, that could change that in a big way.” So, as the old Monty Python gag has it, this bird isn’t dead. It’s resting.