by Three months after taking over Twitter, Elon Musk is adopting a less pessimistic tone about the future of the social network, which defines the Town Square of our time.
A few weeks ago, the billionaire was concerned about the financial health of the platform, which has seen an exodus of advertisers, while advertising revenue made up 91% of Twitter’s revenue in the second quarter. The rest were subscriptions.
The company has not released its third-quarter results. As a private company now, it has been delisted and therefore no longer has a legal or regulatory obligation to publish its results.
In the midst of the exodus of advertisers, Musk claimed that “the company is losing over $4 million a day.” He reiterated that pessimistic view during a Twitter Spaces on Dec. 20. He said the platform was on track to hit $3 billion in negative cash flow before the drastic cost cuts he made. At least 5,000 of the company’s 7,500 employees, by the time it arrived, had been laid off or laid off.
Like most social networks, advertising is Twitter’s bread and butter, but many brands have avoided the platform, waiting to see where Musk was going in terms of content management policy.
Main changes
The billionaire, who describes himself as an “absolutist of free speech”, believes that any message is acceptable on the platform as long as it does not violate the law. As a result, he reactivated most of the accounts, often extremist, banned by the old management because they violated the safeguards put in place to prevent the social network from turning into an “infernal landscape”.
For many advertisers, Musk’s laissez-faire approach risks spreading hate and xenophobia on the platform, a risk they don’t want to take, given that their brands are associated with such messages.
Musk, however, has said there has been a steep decline in hate speech since he took over, but some groups argue otherwise.
“There are about 500 million tweets a day and billions of impressions, so are impressions of hate speech
To limit the weight of advertising in Twitter’s revenue, Musk, who also has to pay hefty interest on the $13 billion debt he personally incurred to finance the Twitter deal, wanted to reinvent Blue, the platform’s subscription service.
It integrated the check mark, which means an account is verified, into Blue and raised the price to $7.99 a month, while also adding other features. Trouble is, these changes were halted by the emergence of numerous imposter accounts, forcing Musk to put new Blue memberships on hold for many weeks. Companies, such as pharmaceutical giant Eli Lilly and defense firm Lockheed Martin, have seen imposter accounts post messages impersonating them.
“Twitter isn’t secure yet”
According to Bloomberg News, the Techno King has built up a significant amount of high-interest debt on Twitter’s balance sheet as part of its takeover. The company’s debt load has soared to about $13 billion, up from $1.7 billion before the deal, and it is now facing annual interest payments approaching $1.2 billion.
His loan could get even more expensive because interest rates on about half of that debt aren’t locked in and will rise with the market.
But Musk, who announced his resignation as CEO of Twitter, now says things aren’t so dire financially. The financial situation of the social network is improving, the billionaire just said.
But the specter of bankruptcy is not entirely excluded.
“We’ve got[Twitter’s]spending under control, so the company is no longer on the fast track to bankruptcy,” the billionaire said on the Dec. 24 All-In Podcast. The story of Twitter, as well as keeping its costs down and reducing its cost structure by a factor of 3, maybe, maybe 4.”
He later reiterated this cautious optimism with a similar message posted on the platform shortly thereafter.
“Twitter is not secure yet, but not on the fast track to bankruptcy,” said the serial entrepreneur. “Still a lot of work to do.”
