Twitter is facing a crisis in its core ad business, as more than 500 of the platform’s top advertisers have paused spending since Elon Musk took over in October, according to a senior Twitter manager.

This revelation came during an employee presentation, in which Siddharth Rao, an engineering manager overseeing the engineers working on Twitter’s ad business, also stated that the company’s daily revenue was 40% lower than the same day a year ago, according to a person with direct knowledge of the matter.

Musk’s plan for Twitter is to diversify its revenue away from ads in the long run, but the continued deterioration of the ad business could make it difficult for the company to break even on a free cash flow basis in 2023, as Musk had predicted three weeks ago.

The success of this plan may hinge on the company’s ability to generate $3 billion in revenue this year and pay $1.5 billion a year in interest related to the debt raised for the $44 billion acquisition. For comparison, Twitter generated $5 billion in revenue in 2021, the last full year for which financial statements were published.

The newsletter Platformer first reported the 40% revenue drop. The Wall Street Journal also reached out to Twitter for comment, but has not yet received a response.

the question on many people’s minds is whether or not CEO Elon Musk is going to bankrupt the company. While it is certainly true that the platform’s ad revenue has taken a significant hit since Musk’s takeover in October, it is important to consider the long-term plan he has for the company.

Musk has stated that he plans to diversify Twitter’s revenue away from ads in the long run, and it is possible that this strategy could ultimately lead to success. It remains to be seen if Musk’s leadership and strategy will be able to steer the company out of this crisis and secure its long-term viability.

According to a Financial Times report, Elon Musk may be facing the first interest payment on the debt he took on to buy Twitter as early as this month. The report cites three people familiar with the matter, and notes that given Twitter’s high level of indebtedness, Musk may have to weigh options including the sale of more Tesla shares to finance the repayment, or even initiating bankruptcy proceedings for the struggling social media company.

It is important to note that Musk acquired Twitter for $44 billion in October, financing the deal with $13 billion of borrowings from banks including Morgan Stanley and Bank of America. The debt is held by Twitter rather than Musk personally, and the company is required to pay back around $1.5 billion a year in interest payments, according to the Financial Times.

A bankruptcy for Twitter would not only be a significant setback for the company, but it could also have serious consequences for CEO Elon Musk. Furthermore, Twitter’s assets could also be sold off to a new buyer during the bankruptcy process. This would mean a change in leadership and a shift in the company’s direction, which would be a significant disruption for Twitter and its stakeholders.

As the situation develops, investors and industry experts will closely monitor Twitter’s ability to address and mitigate the crisis in its core ad business.

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