Twitter, which was once a successful social media site, has been struggling to overcome a series of challenges in recent years.
It was anticipated that Elon Musk, a prominent figure in the technology industry, would be able to revitalize Twitter after he purchased the firm in October 2022.
Nevertheless, rather than experiencing a renaissance, Twitter has been confronted with a drop in advertising revenue as well as other severe issues.
This article goes into the ramifications of Musk’s takeover, conducting an analysis of the elements that are contributing to Twitter’s challenges and determining whether or not these issues occurred before or after Musk acquired control.
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Dwindling revenue of Twitter
The most important problem that Twitter is currently facing is a significant decline in the amount of money it makes through advertisements. Since Musk acquired the business, the corporation has seen a shocking fifty percent decline in the amount of money it makes through advertising.
Musk himself is the one who recognised the negative cash flow and emphasised how important it was to achieve positive cash flow before focusing on other aspects of the company.
The “extreme pressure” that has been put on the company by advertisers in Europe and North America, who have, it would appear, been attempting to drive the company into insolvency, can be linked to the reduction in ad revenue that has occurred.
Layoffs
As soon as he took control of Twitter, Elon Musk did not spend any time putting in place steps to reduce expenses. As a result of this policy, around 3,250 of the company’s 7,500 workers were let go from their positions.
Even if the purpose of these firings was to cut costs, the fact that they took place raised questions about whether or not the platform could continue to function normally with such drastically reduced personnel.
Twitter further compounded these issues in February 2023 by laying off an additional 10% of its remaining personnel, which had a further negative impact on the company’s capacity to carry out its operations.
The unraveling of Thread
The rise of alternative platforms has added to Twitter’s troubles in recent years. The launch of the “Threads app” by Instagram presents a challenge to Twitter’s ability to retain its user base. Threads is a social networking platform that competes aggressively with Twitter for market share by leveraging its connection to Instagram’s two billion users as well as Meta’s two billion users. Threads is reported to have 150 million users.
The movement of users to alternative platforms highlights how urgently Twitter needs to develop and adapt in order to keep its audience.
Fight in court with Meta
Elon Musk’s court fight with Meta, the company that owns Instagram, has also made it harder for Twitter to get better.
Musk has threatened to sue Meta over its new rival app, Threads, saying that Meta has violated Twitter’s “intellectual property rights.” Twitter is very worried that its trade secrets and intellectual property are being taken without permission.
But legal experts say that copying social media platforms is standard in the industry, which makes it unlikely that the courts will side with Twitter.
Downward Valuation
Since Musk bought Twitter, the company’s finances have also taken a big hit. Musk recently said that the company, which was bought for $44 billion, is now only worth $20 billion.
Also, the mutual fund company Fidelity says that Twitter is worth only $15 billion. Investors are worried about Twitter’s financial future and whether or not Musk’s efforts to turn the company around will work.
Most of the attention has been on Twitter’s problems since Elon Musk bought it, but experts in the field say that the company was already having problems before Musk bought it.
Even before Musk became involved, former CEO Meghana Dhar, who also has experience working for rival platforms Snap and Meta, saw that Twitter’s income and growth had been on a steady slide for some time. This point of view raises questions about the fundamental problems that exist inside Twitter’s business model and its overall strategy.
The Closing Remarks
In summary, in spite of Elon Musk’s efforts to bring the platform back to life, Twitter is still dealing with a number of severe challenges.