I think the squandering started earlier than that. He'd wore out his welcome in Hollywood before 1950
It is axiom in the commercial cinema that the central figure of any work must be a human being with whom the mass audience can identify. He or she has to be likable, attractive, desirable, even when capable of villainy; he or she must speak the language of the people. Scriptwriters of proven commercial worth have deliberately tailored their scripts to the specific needs of stars so as not to extend their range too far, and the stars themselves more often than not make further alterations to suit their personalities. Yet so relentlessly has Welles worked against the commercial grain that he has even dared to make the central figures of his films unsympathetic.
In Citizen Kane, Welles created a selfish heartless tycoon who is destroyed spiritually by his own greed and ambition. Americans could have comfortably accepted a rogue or a pirate of this sort, but someone who was haunted by agonizing visions of lost innocence alienated and confused the mass audience for decades. In The Magnificent Ambersons, Welles portrayed an impudent, bad-tempered puppy of a man, George Minafer, who disrupted the life of a small town; this charmless creature proved impossible to identify with in an age of heroes of the caliber of Tyrone Power and Errol Flynn. The other protagonist of the story, Aunt Fanny, was the sort of figure usually made fun of in American films: the tortured virgin spinster who hopelessly sets her cap for a man she cannot have. Contemporary audiences laughed at Aunt Fanny, whose misery failed to touch a chord in the American heart.
Citizen Kane lost well over $100,000. The Magnificent Ambersons lost more than half a million. Following his failure to finish It’s All True, Welles attempted a comeback with The Stranger, a movie in which the protagonist was a [National Socialist] war criminal hiding in a small American town. Again it was impossible for the audience to identify with such a person; the war was only just over, and there were few families that had not been affected by it. The Lady From Shanghai had as its hero a liberal sailor who had supported the loyalist cause in the Spanish Civil War — and many Americans knew that people like that were Communist sympathizers. The making of Rita Hayworth, reigning sex goddess of the American screen, into a murderess further alienated the public.
Shakespeare has never been box office in America, so Welles’s Shakespearean trilogy sank without a trace. Ironically, while the films he directed were failing, Welles himself was highly bankable as an actor and public personality, much as he is today. In Europe, Welles’s discipline disintegrated, and he lost control of his career. As his waistline grew, his career shriveled; it was almost as though eating and drinking were substitutes for creativity.