"The biggest problem with Twitter's ad business is that advertisers don't trust [Elon] Musk," said Jasmine Enberg, principal analyst at Insider Intelligence.
"Twitter needs to unravel Musk's personal brand from the company's corporate image to regain advertiser trust and bring back ad dollars," she added.
Analysts at Insider Intelligence said they were slashing an earlier worldwide revenue estimate of $4.74 billion by more than a third to $2.98 billion as trust in the platform deteriorates.
Musk's tumultuous takeover of Twitter has already seen several major advertisers suspend their activity on the platform after the Tesla tycoon loosened the reins on content moderation and laid off over half of a 7,000 strong workforce.
According to research firm Pathmatics, in January fourteen of the top 30 advertisers on Twitter stopped advertising on the platform since Musk took charge on October 27.
Insider Intelligence noted that Musk's efforts to build up a subscription service "won't make up for the lost ad revenue."
Musk's leadership has also cooled Twitter's remaining users, with Insider Intelligence forecasting a two minute drop in time spent on the platform to 34 minutes per day - TikTok's users stay on the app for almost an hour.
Insider Intelligence said the drop in usage was due to the proliferation of hateful content and technical glitches on the platform, as well as a failure to expand into social video and pose a challenge to TikTok.
"Twitter engagement is still heavily dependent on the news cycle," said Engberg. "The takeover saga caused a spike in time spent in 2022 that has now dissipated, as users have lost interest in Musk's antics."
Musk bought Twitter for $44 billion, though he has since written down the company's value to half that.