It’s been just four months since Tesla CEO Elon Musk took over Twitter, and a lot has happened in that time. Despite declining advertising revenue in recent months, the company may still improve its cash flow by next quarter, according to Musk.
Above: "Elon bucks" above a Tesla frunk (Image: Casey Murphy / EVANNEX).
Musk said that Twitter has “a shot” to become cash-flow positive in Q2, as detailed in a recent report from Business Insider. The statement came at a Morgan Stanley conference, where Musk was interviewed by the consultancy’s Michael Grimes, the head of global technology investment banking.
Twitter has been facing “a massive decline in advertising” in recent months according to Musk, who cites the cyclical nature of business and “political” reasons as the reasons behind the losses. Despite these losses, Musk’s hopes to improve cash flow do show some positive undertones.
"It's been a very difficult four months, but I'm optimistic about the future," Musk said.
Alongside the optimism, however, Musk has been vocal about Twitter’s lack of monetization since the beginning of his saga to purchase the company for $44 billion. During the interview with Grimes, he called it “startling,” saying that Twitter earns only 5 to 6 cents per hour, despite the fact that users spend a cumulative 130 million hours on the platform every day.
Upon Musk’s initial takeover of Twitter, he made huge shifts toward cutting costs, including things such as mass layoffs, cutting free lunches and other employee benefits, and more. Musk also said in November 2022 that Twitter was losing $4 million per day.
Musk also pointed out in the interview that Twitter was looking to monetize the company, including the Blue subscription launched in November, which lets users pay $8 per month to gain extra security verification and other benefits.
The monetization measures also include a cut of non-debt expenditures to $1.5 billion from its original projection of $4.5 billion for this year. This resulted in decreasing cloud services, which cut down on the bill by as much as 40 percent. Twitter is also up against around $1.5 billion in annual interest payments following its $13 billion debt incurred during the acquisition, says Musk.
By the end of the year, Musk is expected to step down as CEO at Twitter, and he has already said he’s looking for someone to replace him. In any case, Musk’s bid to make Twitter profitable will be a challenge, though his track record with financially-sound companies could influence the outcome.
Source: Business Insider