Has maverick billionaire Elon Musk bitten off more than he can chew with his Twitter acquisition? It would certainly appear so, as his hard-lined stance on running the social media platform as per his whim, firing people en masse and welcoming contentious users back as put advertisers on the edge.
These whimsical decisions now reflecting on the company's balance sheet, which saw its year-on-year revenue go down by 40 per cent, according to a report by Platformer.
This come as a further bad news for the Tesla CEO, who had taken $13 billion debt to acquire Twitter for a whopping $44 billion in October 2022. The first installment of this debt repayment is due by end of January.
Musk invested more than $20 billion of his own money to buy Twitter last October. He has been trying hard to raise funds to pay for this high-value acquisition, which many have termed a vanity project that is diverting his attention from his other businesses, including SpaceX and Tesla.
In December, the billionaire sold 22 million shares worth $3.58 billion in Tesla. This was his second sale in as many months last year; in November, he sold 19.5 million shares of Tesla worth $3.95 billion, within days of completing Twitter's takeover.
Meanwhile, Twitter, which relies majorly on advertising for sustenance, has seen key advertisers hit the pause button on their spending plans for the platform. This came after they observed Musk's business strategies, especially those around mass layoffs and his approach towards free speech.
The company has laid off more than 7,500 employees globally since October 2022 and also disbanded its Trust and Security Council, an advisory group of more than 100 independent and civil human rights organisations. The group used to provide content-related suggestions to the company.
The social media platform was also accused of removing accounts of some journalists who reported about Musk's tiff with a college student, who was tracking his private jet.
The continual controversy surrounding Twitter's approach towards free spreech and restoring accounts of users blocked by the social media for controversial comments spooked many global brands.
A month after Musk's takeover, Media Matters reported that 50 of the platform's top 100 advertisers had left the site, including General Motors, Chevrolet, Chipotle, Ford and Jeep. Others chose to reduce their ad spending, dealing a heavy blow to the company, since 90 per cent of its revenues comes from advertising.
Concerned by this exodus of clients, Twitter tried to lure them back in December by offered $500,000 worth of free ads to companies that spent $500,000 with a $1 million cap. But will advertisers bite this bait?